Trump backs Saudi crackdown after arrests of princes, executives

The detentions ordered by King Salman (above) reinforced speculation that he was clearing any remaining obstacles to his son Crown Prince Mohammed bin Salman's accession to the throne.
The detentions ordered by King Salman (above) reinforced speculation that he was clearing any remaining obstacles to his son Crown Prince Mohammed bin Salman's accession to the throne. PHOTO: AFP

TOKYO (BLOOMBERG) - President Donald Trump vouched for Saudi Arabia's king and crown prince after the weekend arrests of princes, businessmen and officials in an anti-corruption drive that has rattled the kingdom and shocked investors.

"I have great confidence in King Salman and the Crown Prince of Saudi Arabia, they know exactly what they are doing," Trump said in a tweet Tuesday morning from Japan.

In all, 11 princes - including Prince Alwaleed bin Talal, one of the world's richest men - four ministers and dozens of former ministers and well-known businessmen were taken into custody, according to Saudi media and a senior official who spoke on condition of anonymity.

The detentions ordered by King Salman reinforced speculation that he was clearing any remaining obstacles to his son Crown Prince Mohammed bin Salman's accession to the throne. Trump's backing signals a break with a coterie of leaders who were long accustomed to access and influence with a generation of US presidents. And it firmly puts him in the corner of a young leader moving quickly to reshape his country.  Trump's endorsement of the crackdown came just days after he personally lobbied King Salman to list the Saudi Arabian Oil Co. on the New York Stock Exchange during a phone call between the world leaders.

On Monday, Saudi Arabia's attorney general said that the arrests were only "phase one" of a drive against corruption.

It was "merely the start of a vital process to root out corruption wherever it exists," Sheikh Saud Al Mojeb said in a statement. The suspects will have access to legal counsel and pledged to hold trials "in a timely and open manner", he said.

Local banks also began freezing the accounts of those implicated, according to two people with knowledge of the matter. Central bank officials and the government's Center for International Communication didn't immediately respond to requests for comment.

The detentions were lauded by many Saudis bearing the brunt of low oil prices who have long complained that the kingdom's elite were above the law.

"It's almost the equivalent of arresting Bill Gates to have Prince Alwaleed bin Talal under arrest," Robert Jordan, former US ambassador to Saudi Arabia, told Bloomberg TV.

"The royal family, for years, has behind-the-scenes had a series of power struggles, rivalry among tribal aspects of the royal family, but this is about the most breathtaking revelation I think we could possibly have imagined," he said.

The king also relieved Prince Miteb bin Abdullah from his post as head of the powerful National Guard, taking out one of the last senior royals that had survived a series of cabinet reshuffles that promoted allies of his son. Prince Mohammed became heir to the throne in June when his cousin was removed in a palace shakeup.

A senior Saudi official denied the crackdown had any other purpose than to fight corruption. The accused will be "will be subject to investigation according to the regular procedures adopted in the Kingdom," he said.

According to the official, the charges against Prince Alwaleed include money laundering, bribery and extortion of some officials. Prince Miteb is charged with embezzlement, fraudulent employment and the awarding of projects to his own companies. Another royal family member, Prince Turki bin Abdullah is accused of corruption related to the Riyadh train project, using his influence to win projects for companies affiliated to himself, the official said.

Bloomberg was unable to reach any of the accused to seek comment.

Shares in Prince Alwaleed's Kingdom Holding tumbled 5.3 per cent at the close in Riyadh. Kingdom said in a statement that the Saudi government has full confidence in the company.

The powerful new anti-corruption commission said in a statement that authorities "have worked painstakingly for three years to investigate the crimes in question and expose their perpetrators, a very difficult task when it involves influential officials and senior executives".

The commission asserted its right to freeze assets and take other "appropriate" measures. Reuters, citing bankers it didn't identify, reported that the freezing of accounts was a precautionary move.

The scale of the campaign fits into the style of a crown prince with a knack for shock and awe. Since 2015, the prince - known overseas as MBS - has embarked on an unprecedented shakeup to prepare the economy for the post-oil era, plunged the kingdom into war in Yemen and severed diplomatic and transport links with neighbouring Qatar. In the meantime, he has taken control of every lever of power from defence to oil policies.

"This is part and parcel of the MBS approach of protecting himself and the leadership from the opposition," said Lori Plotkin Boghardt, specialist in Arab Gulf politics at the Washington Institute for Near East Policy. "This is a very politically risky move by MBS."

Jordan said a genuine push against corruption would add to the credibility of Prince Mohammed's push to overhaul the economy, which include selling a stake in oil giant Saudi Aramco.

"If it turns out to simply be a power grab, then I think it's going to hurt the Saudis in the long run, and certainly hurt this crown prince," he said.

On Nov 4, Trump tweeted, "Would very much appreciate Saudi Arabia doing their IPO of Aramco with the New York Stock Exchange. Important to the United States!"