Influential investor Alwaleed bin Talal arrested in Saudi Arabia corruption crackdown on the verge of Aramco IPO


Under the guise of cracking down on corruption, the government of Saudi Arabia arrested over a dozen prominent princes, ministers, and former ministers on late Saturday night. The news came over Al Arabiya, the state-owned satellite network and is likely a part of heir apparent Crown Prince Mohammad bin Salman’s efforts to consolidate power. Among those arrested was influential billionaire investor Prince Alwaleed bin Talal, a move that sent shockwaves through the world’s financial centers.

Although charges have not yet been released, the allegations against him include money laundering, bribery, and extortion. Alwaleed is one of the world’s richest men and biggest investors on Wall Street, with holdings in Citigroup, Twitter, Twentieth Century Fox, and Time Warner.

Two weeks ago, in an interview with CNBC, Alwaleed spoke extensively on the upcoming Saudi Aramco IPO set for next year, his various investments in U.S. corporations, and the economic policies of President Donald Trump.

The public offering of Saudi Aramco is expected to be the largest ever as roughly 5 percent of the company would be offered to investors. In the interview Alwaleed speculated that more than 5 percent may be offered in the coming years.

“No one talks about this idea that if you go 5 percent, there’s nothing that prohibits you from going another 5 percent next year, and 5 percent the third year and fourth year, and so forth, depending on the situation” he said.

The nearly $100 billion that would be generated from the IPO would be used to fund “Vision 2030”, the Crown Prince’s plan to diversify the nation’s economy. A plan Alwaleed publically supported, stating that Saudi Arabia was “in the midst of a major overhaul and change on all fronts- economical, financial, social, entertainment, and even politically” adding, “We always heard about the so-called Arab Spring in certain Arab countries, this is our version, our Saudi version of Arab Spring, our peaceful Arab Spring.”

The Kingdom Holding Company, of which he is the owner, saw its shares plunge in trading on the Saudi stock exchange as a result of the arrest.

“This would be like arresting Warren Buffett or Bill Gates in the United States” said Robert Jordan, former U.S. ambassador to Saudi Arabia.

“We’ve got to figure out what the basis of these charges could be” he added, “The Saudis are going to have to be transparent about what happens. We’re going to have to understand why it is that these leaders have been incarcerated.”

Analysts speculate that more than anything, this move is likely to rattle investors as Alwaleed and the other arrestees were all key players in the Saudi business community.

Kristian Coates Ulrichsen, an analyst at Rice University’s Baker Institute for Public Policy warned that the infamous investor “…will have business networks that will now anxiously be re-examining whether or not the commercial interests they have will be safe.”

Article written by HEI contributor Kevin Abbott.

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