Please use the sharing tools found via the email icon at the top of articles. Copying articles to share with others is a breach of FT.com T&Cs and Copyright Policy. Email licensing@ft.com to buy additional rights. Subscribers may share up to 10 or 20 articles per month using the gift article service. More information can be found here.
https://www.ft.com/content/480768ae-044c-11e8-9650-9c0ad2d7c5b5
Share on Twitter (opens new window) Share on Facebook (opens new window) Share on LinkedIn (opens new window) Save Save to myFT Simeon Kerr in Dubai and Ahmed Al Omran in Riyadh YESTERDAY 4 Shares in Kingdom Holding Company soared on Sunday after Prince Alwaleed bin Talal, its billionaire owner, returned to his palace in Riyadh almost three months since his arrest and detention over corruption allegations. Investor optimism swiftly lifted shares in Prince Alwaleed’s investment vehicle, by 10 per cent, the daily upper limit. But insiders warned that the future for KHC, alongside the businesses of other magnates released over the weekend from the Ritz-Carlton hotel in the Saudi capital, remains far from clear. No detail has been provided on any settlements that may have been reached. Prince Alwaleed was one of 300 princes and tycoons detained since November 4 in Saudi Crown Prince Mohammed bin Salman’s purge. He was released together with other suspects, including MBC TV mogul Waleed al-Ibrahim, retail magnate Fawaz Alhokair and Prince Turki bin Nasser. The crackdown is not over completely. Some of those freed from their gilded prison have been told not to travel outside Saudi Arabia for now, say people aware of the matter. The attorney-general has said that up to 95 suspects who are refusing to settle claims will be taken to trial. But Prince Alwaleed was keen to advertise his release — and proclaim his innocence. Interviewed by Reuters in his hotel suite on Friday, he described his detention as “a misunderstanding,” saying that he did not expect to hand over shares in his company, Kingdom Holding, in which he has a 95 per cent stake. Recommended Top Saudi broadcaster caught up in Riyadh’s corruption shakedown Mohammed bin Salman: the meteoric rise of Saudi Arabia’s new crown prince Saudi Arabia’s reform drive is bold, yet fraught with risk Hours later, he was released from captivity to his home in Riyadh before decamping to his ranch in the desert outside the capital, where he has been receiving visitors. KHC’s employees were told by the government in the first days of their bosses’ captivity, that it should be business as usual despite the disastrous reputational damage stemming from the flamboyant prince’s apparent downfall. In the end, insiders said the company coped as well as could be expected in the circumstances. Under a pre-existing programme to divest its hotel assets, KHC sold stakes in two properties, including the Four Seasons Beirut, during Prince Alwaleed’s enforced sojourn at the Ritz. The valuations achieved were below initial hopes but were better than fire sales, people briefed on the disposals said. Breathing a collective sigh of relief, KHC’s bankers sent their messages of congratulations to the prince’s team. Several banks had loaned hundreds of millions of dollars to Prince Alwaleed using his shares in global equities as collateral, bankers said. Some had been growing increasingly concerned about possible attempts by the authorities to seize assets backing the loans. One bank attempted to press fellow lenders to lobby the government collectively to forestall any rash action such as arbitrary asset seizures. But executives were calmed by the fact that they had legal rights to the assets, complicating any change of ownership. Indeed, the difficulty of recovering assets and cash from abroad has hindered the Saudi authorities’ attempts to recover up to $100bn in assets from suspects targeted in the corruption probe. “They are very smart people — they don’t leave cash in bank accounts, they find ways to hide this money in various assets,” Mohammed al-Jadaan, finance minister, told a session at the World Economic Forum meetings in Davos last week. Attempts to raid bank accounts held in Switzerland were rebuffed, say senior Swiss bankers, who pointed out that only a legal approach with credible evidence of wrongdoing would allow Swiss lenders to open their vaults to Saudi authorities. Analysts said that by ending the Ritz round-up, the Saudi government also intended to ease concerns among the global investor community and large Saudi groups which had been spooked by it. In Davos, Mr Jadaan was also giving assurances to Saudi and international executives that the crackdown was coming to an end but had nonetheless sent “a very targeted message that we have zero tolerance for corruption”. “In a large sense, the purge became a liability as much as an opportunity,” said Andrew Bowen, visiting scholar at the American Enterprise Institute. “MBS made some big hits and changed the rules of the kingdom but, equally, that uncertainty produced a PR blowback.”
