Saudi Arabia Reaps Billions From Anti-Corruption Probe
Saudi Arabia’s Crown Prince Mohammed bin Salman launched a anti-corruption campaign that resulted in hundreds of wealthy officials, ministers, princes and businessmen being arrested.
We had speculated that this wasn’t really a move to make Saudi Arabia’s government less corrupt, but instead to acquire much needed funds for the country.
“Whatever is going to be recovered will go to the treasury because it was taken from the treasury,” said Prince Mohammed al-Jadaan to The Wall Street Journal. “And then it will be used obviously in the years to come, whatever is coming, as part of the budget allocation.”
An estimated $100 billion in assets have been seized in the corruption probe. Jadaan also has said that the crackdown is far from over.
According to WSJ, a few unnamed sources said that the government plans to seize up to $800 billion in both cash and assets from the arrests.
Many of the officials arrested were caught completely off guard.
“One of the detainees, for example, met representatives of Prince Mohammed a few weeks before he was detained in Jeddah. At the time, he believed that the meeting had been productive, assuming it signaled how he should continue his extensive domestic and international interests,” writes BusinessDay. “Prince Alwaleed, who owns stakes in the likes of Citigroup and Twitter and is a nephew of King Salman, had publicly backed Prince Mohammed’s efforts to reform the kingdom before his arrest on allegations of bribery and extortion.”
Some of the other individuals arrested, including the Economy and Planning Minister Adel bin Mohammed Faqih, National Guard Minister Prince Miteb bin Abdullah bin Abdulaziz and Naval Forces Commander Admiral Abdullah bin Sultan bin Mohammed Al-Sultan– have already been released from their detainment at the Ritz Carlton hotel in Riyadh. This means that massive settlements were likely made.
“They are making settlements with most of those in the Ritz,” said one adviser to BusinessDay. “Cough up the cash and you will go home.”
“Those who don’t want to settle will go to court, and that’s also a few years down the road,” said al-Jadaan to the WSJ. “So it will take time.”
Bin Salman said the recovered funds will be put towards education and health-care.
“The country on Tuesday unveiled unprecedented spending of $260 billion in next year’s government budget, including $10.7 billion allocated to an allowance for poorer households, $51 billion to education and $39 billion to health and social development,” writes WSJ. “There has also been speculation that some of the recovered assets could wind up under the Public Investment Fund, Saudi Arabia’s main sovereign wealth fund.”
The massive arrests also look like a convenient way for Mohammed Bin Salman to weed out his competition for leadership too.
Oil sales are down for the country due to the high price and this is where the majority of the revenues come from for Saudi Arabia’s government.
Businessmen in the country are hoping that the campaign will entice investors since the Saudi system is “less corrupt.”
“Hopefully this over the long term will attract more investors, even foreign investors,” said Majed al-Qasabi, Saudi Arabia’s Minister of Commerce and Investment.
Author’s note: This campaign had little to do with corruption, this was the government trying to shore up its finances and now they are even admitting it.
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