DUBAI (BLOOMBERG) - Saudi Arabia's unprecedented decision to arrest senior princes and billionaires shocked analysts across the region, but to some it's a sign the kingdom is serious about change.
A newly formed anti-corruption committee, headed by Crown Prince Mohammed bin Salman, instructed police to arrest 11 princes, four ministers and dozens of former ministers, the Saudi-owned Al Arabiya television said.
Among those arrested is Prince Alwaleed bin Talal, one of the world's richest men and a shareholder of Citigroup Inc and Twitter, according to a senior Saudi official who spoke on condition of anonymity. Prince Alwaleed's company, Kingdom Holding Co, trades in Riyadh.
The decision comes about two weeks after the kingdom announced a series of projects, including a US$500 billion (S$682.5 billion) city, as part of a plan to overhaul an economy that has been almost entirely dependent on oil revenue for decades.
The move "hasn't been done in this scale or in this public manner before", said Mohammed Ali Yasin, chief executive officer of Abu Dhabi-based NBAD Securities LLC.
"Accountability has been introduced, no one is immune. Everybody will be worried now. Some of these names have been there for 30 years. This affects Kingdom Holding, Saudi Airlines and the Finance Ministry," he said.
"If you want to create a new direction, a new environment you need to change the way business is being done."
The Saudis "are sending a very strong statement to the world that they mean business", he said.
A plunge in crude prices has forced Saudi Arabia to face the shortcomings of its US$650-billion economy. Part of its plan to prepare for life after oil is to sell shares in oil giant Aramco in 2018 and transform its stock market to a gateway into Saudi Arabia.
"We should see some pressure in stock trading today, no doubt," said Mazen Al-Sudairi, head of research at Al Rajhi Capital in Riyadh.
"There should be some initial speculation in general as people are just concerned about what happened, this will be priced in. But if you look on the long term, this should be seen as a positive measure that is good for the country and the market."