Is the second wave of the Saudi anti-corruption probe on again?

February 22, 2018 12:32 pm


There are mixed messages coming out of Saudi.

Apparently last month, Saudi officials were doing some diplomatic acrobatics, giving assurances that the corruption probe is closed, just ahead of a March trip by Saudi Crown Prince Mohammed Bin Salman to Europe, and later the US.

Someone forgot to tell Saudi’s Shura Council about that, as they called for a new round to coral bribery in high places.

Is there a clear message coming out of the kingdom?

Saudi Anti-Corruption: Part 2

Saudi Arabia’s Shura Council has requested that the anti-corruption commission (Nazaha in Arabic) investigate suspicious and irregular government purchases, Arab News reported yesterday, February 21, 2018.

Shockwaves rumble across Saudi: Kingdom’s trashing traditional taboos

The request marks the start of the second phase of the anti-corruption campaign following the November 4, 2017 Crown Prince Mohammed’s led graft probe, when princes, and prominent members of the royal family, dozens of current and former ministers, and others in the business elite were detained at the Ritz

Some 1,700 bank accounts were frozen and Saudi officials said $106bn in assets, cash or properties were recovered.

Attorney General Saud al-Mojeb had previously described the sweep as “an independent judicial process” and “part of an overhaul to ensure transparency, openness and good governance”.

At the19th ordinary session of the Council, Nazaha was asked to require government agencies with the highest number of bribery cases to review internal procedures in order to tackle the issue.

Related: Is Saudi sending the right signals ahead of Saudi Crown Prince’s UK US trip?

Tough task of calming investor nerves  

Reuters recently reported that Saudi is trying to reassure unsettled foreign and local investors that the kingdom remains open for business.

The secrecy around the crackdown raised suspicions that the crackdown was at least partly politically motivated.

“This whole thing has become one big ball of contradictions,” a Western businessman with extensive contacts in the kingdom told Reuters.

Reuters said top officials, including Prince Mohammed, met senior local businessmen last month, in Davos and other locations including Riyadh and Jeddah, to reassure them that the crackdown was mostly over and that it was safe to do business, quoting five Saudi and Western sources who spoke with people who attended the meetings.

The January meetings between Saudi officials and the local business community held the primary message that another wave of mass detentions is not on the cards, the sources told Reuters.

Read: Is Saudi a divided nation looking for an identity

“They were told the anti-corruption campaign is done: continue with your business as normal and invest in the economy,” one of the sources, a senior banker, described the meetings.

“The meetings with the crown prince have calmed the nerves of some attendees,” the sources said, but others remain worried that they could be detained at any time and that instability has become the new norm, said Reuters.

“The whole business community is traumatized,” said one of the sources, a Saudi businessman.

Does Saudi need to seize more money?

According to a recent Stratfor intelligence report, the 2018 Annual Forecast, it wrote that announcing that the country’s corruption crackdown was over indicates that the country is keen to appear stable to investors.

“When a Saudi public prosecution official announced the end of the anti-corruption campaign, it looked more like the end of a first phase than the end of an era,” said Stratfor.

“As the Saudi government gears up for an initial public offering of Saudi Aramco stock sometime this year or next, investors are looking for stability, transparency and certainty.”

How will the seized $106bn be spent?

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Reuters said it should help raise tens of billions of dollars for huge development plans, such as a $500bn economic zone in the northwestern desert, aka NEOM by the Red Sea.

“The government has already said will be used to partly fund a citizens’ account program which will be allotted $8.5bn in 2018, and it is meant to offset the effects of value-added taxes, gas price increases and general cost of living challenges for ordinary Saudis,” said Stratfor.

“In addition, the government needs to fund additional one-off allowances, such as the $13bn promised several weeks ago to civil servants, soldiers and pensioners.”

Stratfor also pointed out that the 2018 Saudi budget, which stands at $261 billion has an expected deficit of $52 billion, giving authorities funds to plug the gap.

 

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Hadi Khatib
By Hadi Khatib
Hadi Khatib is a business editor with more than 15 years' experience delivering news and copy of relevance to a wide range of audiences. If newsworthy and actionable, you will find this editor interested in hearing about your sector developments and writing about it.



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