Where family, state merge, will Saudi Arabia be fair?

Where family, state merge, will Saudi Arabia be fair?

King Salman's close relatives not only rule Saudi Arabia. They are also in business with it.

A major Saudi investment firm founded by one of the king's sons, and now chaired by another, owns a significant stake in a conglomerate that does extensive government business, including in a shipbuilding partnership with a French defence contractor. A smaller firm founded by another of his sons says it invests in healthcare, telecommunications, education and other regulated or state-funded fields.

None of that apparent conflict of interest seems to be against the law.

But now their brother, Crown Prince Mohammed bin Salman, is leading a sweeping crackdown against what he has labelled "corruption" that has swept up at least 11 princes from the House of Saud. But his immediate family's complicated and mostly undisclosed business interests are raising questions about what that accusation means in a kingdom where the law has so far included little or no regulation of what other countries have labelled and outlawed as self-dealing.

Saudi laws, issued by royal decree or derived from Islamic law, have so far included little or no regulation of the sprawling royal family and its closest clients. The family has never disclosed the sources of its income, how much its members might take from the country's oil revenues, how much they earn from state contracts or how they afford their lavish lifestyles.

King Salman has never explained where he got the money to buy as much as $28 million in London luxury homes, just as his son, Mohammed, has never said how he was able to plunk down
more than $500 million for a 440-foot yacht he spotted one day and decided he had to own.

The kingdom, an absolute monarchy, has also never attempted to create an independent court system to adjudicate claims. And if corruption is defined as private profit at the public expense, the practice is so pervasive that any measures short of revolutionary change may appear to be selective prosecution.

"It is straight out of the autocrat's playbook," said Katherine Dixon, a researcher at Transparency International who has studied the Saudi defence industry. "Using state resources for your own ends is still OK if you are part of the right faction or clique, but because corruption is what people care about, it is used as a public rallying cry to justify a crackdown."

She and others compared Mohammed's campaign to anti-corruption drives by President Xi Jinping in China or President Vladimir Putin in Russia, where prosecutions are often politically motivated. As many as 500 people have now been detained on allegations of corruption as part of the crackdown. Many are being held at Riyadh Ritz-Carlton in what may be the world's most luxurious prison.

The Saudi Council of Ministers said on Tuesday that all arrests were "based on specific evidence of criminality and acts that were intended criminal transgressions and resulted in unlawful gain." "The rights of the accused and the facts relating to the offences are protected by law at all stages during the investigation and judicial process," the council added.

But the government had not disclosed any specific charges or evidence, or even the names of those arrested. The first wave began just hours after a royal decree created an investigating committee under Mohammed, leaving little time for inquiry.

The courts are under the effective control of the king and crown prince. And it was unclear which branch of the court system might hear the cases - the main Shariah court system or the more specialised board of grievance courts that handle administrative complaints.

"The law is not meant to govern the ruling family in any meaningful way, or to govern the relations between the ruling family and the state," said Nathan J Brown, a scholar at George Washington University who studies Arab legal systems. "Ultimately, the king and some high members of the royal family can do what they want and make it legal later," he said, and the lack of regulation over royal self-dealing "opens the door wide to what would be considered corruption in other systems."

Many Saudis appear to have applauded the crackdown. Two-thirds are under 30, many are frustrated by high unemployment, and some may take a certain satisfaction at even an arbitrary comeuppance for so many of the rich and powerful.

"It's going to be popular with the commoners who see important parts of the al-Saud family as a rent-seeking, unaccountable caste," Steffen Hertog, an associate professor at the London School of Economics and the author of a book on the Saudi bureaucracy. "Saudi businesses have been complaining about royal encroachment for decades."

Some cases may be clear-cut. One area that the official Saudi media say Mohammed intends to investigate is flooding in the city of Jiddah that killed more than 100 people in 2009. In that case, a Saudi businessman was accused of absconding with millions of dollars allocated for a Jiddah sewage system and never installing any pipes. "We all knew, and we never reported on it," Jamal Khashoggi, then the editor of a major Saudi newspaper and now living in exile, wrote this week in The Washington Post.

Prime prisoner

Beyond that case, only a few anonymously sour-
ced reports of the potential charges have emer ged. A professionally coordinated social media campaign, which appears to be organised by the government, has accused the most important prisoner, Prince Mutaib bin Abdullah, the former chief of the national guard and a son of the previous king, of enriching himself at public expense by diverting funds from the national guard. Citing unnamed sources, news reports have suggested that he would be accused of hiring ghost employees and paying inflated contracts to companies he owned for equipment like walkie-talkies and bulletproof military gear.

But in a country named for its ruling family, the line between public and private money can be hard to discern. Mohammed's corruption committee "can basically detain anyone for anything they choose to call corruption," said Robert
Jordan, the former US ambassador to Saudi Arabia. "That's part of how this web was spun."

The most famous detainee, Prince Alwaleed bin Talal, had no apparent need for graft. He was well known as an investor in international stock markets and as one of the world's richest people; the sources of his wealth were more transparent than most princes.

Alwaleed had been a critic of the kingdom's closed economy and pervasive corruption. A secret 1996 diplomatic memorandum said that Alwaleed told the US ambassador how a handful of senior princes controlled billions of dollars in off-budget programmes, revenue roughly equal to 1 million barrels of the country's oil per day. According to the memo, the Two Holy Mosques project and the Ministry of Defense's strategic storage project, were "highly secretive, subject to no ministry of finance oversight or controls."

The memo, disclosed in the trove of State Department documents released by WikiLeaks seven years ago, provided a detailed blueprint of the varied ways that money flows to members of the royal family either from state coffers or through private business in an otherwise opaque system.

"In other countries we talk about petty bribes,"
said Dixon of Transparency International. "In Saudi Arabia, it is theft on a grand scale."

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