February 6, 2018
Back in November of of 2017, Mohammed Bin Salman (MbS for short), the newly anointed Crown Prince of Saudi Arabia, pulled one of his out-of-nowhere-stunts that seem to be his calling card since he began his sudden rise to power: a crackdown on Saudi royals and businessmen accused of corruption. Nearly a dozen princes were arrested, along with several hundred other politicians and prominent businessmen. In what seems more like a Monty Python sketch than an anti-corruption campaign, all of those detained were moved to the Carl-Ritz of Riyadh, where presumably they were ruthlessly cheese boarded.
This was a pretty bizarre in that the difference between public money and royal money in the Kingdom of Saudi Arabia has always been deliberately blurred. As the they say in the tech industry, “it’s a feature, not a bug”. Arresting a member of the House of Saud for corruption is kinda like giving out speeding tickets at the Indy 500.
At the time it was easy to view this as a simple purge: among those arrested was Prince Alwaleed bin Talal, a majority owner of the Rotana media company and a business partner of Rupert Murdoch; Waleed Al Ibrahim, who owns MBC and Al Arabiya; and Saleh Kamel, billionaire and owner of Dallah al-Baraka. These are the owners of the three media organizations that are the closest thing to independent news outlets that the Kingdom has and the largest Arab media concerns outside Al Jazera.
Also notable among the arrests was Mutaib bin Abdullah, the Minister of the Saudi Arabia National Guard. The KSA deliberately separated its security apparatus such that the SANG was a separate ministry from the defense ministry and interior ministry. This organization, along with the Saudi Royal Guard (which answers only directly to the king), separated control of the KSA’s various security organizations into four different official positions as a way of preventing an armed coup d’etat (a pretty standard move in autocratic governments). The Fresh Prince of Riyadh however was already the Defense Minister and the de facto Interior Minister even before becoming Crown Prince, and once crowned king, the official head of the Royal Guard. Sacking the head of the SANG puts all of the kingdom’s armed forces solely in MbS’s hands, a rather sweeping consolidation.
After the arrests however, the Kingdom allowed those detained to make ‘settlements’ for their freedom: forfeiting their allegedly ill gotten gains in return for amnesty. This twist made the crackdown seem a lot less like a purge and a lot more like a gangster style shake down. Last week it was announced that over $100 billion was seized from the detainees to date. To put this into perspective, the much anticipated 2018 IPO for Aramco, the KSA’s national oil company, is estimated to be around the same amount (a sell off of 5% of the company valued at roughly 2 trillion). So the ‘corruption crackdown’ exceeded the projected value of IPO that will fund the Kingdom’s massive economic diversification project (The Fresh Prince’s “Vision 2030”). So was this a consolidation of power or a financial scam on an unprecedented scale? Either way, it had to be the most expensive minibar tab in history.