LDN - Business

Future Saudi king tightens grip on power with arrests including Prince Alwaleed

[November 06, 2017] By Stephen Kalin and Katie Paul

RIYADH (Reuters) - Saudi Arabia's future king has tightened his grip on power through an anti-corruption purge by arresting royals, ministers and investors including billionaire Alwaleed bin Talal who is one of the kingdom's most prominent businessmen.

Prince Alwaleed, a nephew of the king and owner of investment firm Kingdom Holding, invests in firms such as Citigroup and Twitter. He was among 11 princes, four ministers and tens of former ministers detained, three senior officials told Reuters on Sunday.

The purge against the kingdom's political and business elite also targeted the head of the National Guard, Prince Miteb bin Abdullah, who was detained and replaced as minister of the powerful National Guard by Prince Khaled bin Ayyaf.

The allegations against Prince Alwaleed include money laundering, bribery and extorting officials, one official told Reuters, while Prince Miteb is accused of embezzlement, hiring ghost employees and awarding contracts to his own companies including a $10 billion deal for walkie talkies and bulletproof military gear worth billions of Saudi riyals.

The allegations could not be independently verified and members of the families of those detained could not be reached.

News of the purge came soon after King Salman decreed late on Saturday the creation of an anti-corruption committee chaired by Crown Prince Mohammed bin Salman, his 32-year-old favorite son who has amassed power since rising from obscurity three years ago.

The new body was given broad powers to investigate cases, issue arrest warrants and travel restrictions, and seize assets.

"The homeland will not exist unless corruption is uprooted and the corrupt are held accountable," the royal decree said.

Analysts said the arrests were another pre-emptive measure by the crown prince to remove powerful figures as he exerts control over the world's leading oil exporter.

The roundup recalls the palace coup in June through which he ousted his elder cousin, Mohammed bin Nayef, as heir to the throne and interior minister.

MbS, as he is known, was expected to follow at least by removing Prince Miteb from leadership of the National Guard, a pivotal power base rooted in the kingdom's tribes.

Over the past year, MbS has become the ultimate decision-maker for the kingdom's military, foreign, economic and social policies, causing resentment among parts of the Al Saud dynasty frustrated by his meteoric rise.

Saudi Arabia's stock index was dragged down briefly but recovered to close higher as some investors bet the crackdown could bolster reforms in the long run.

The royal decree said the arrests were in response to "exploitation by some of the weak souls who have put their own interests above the public interest, in order to, illicitly, accrue money."

REFORM AGENDA

The line between public funds and royal money is not always clear in Saudi Arabia, an absolute monarchy ruled by an Islamic system in which most law is not systematically codified and no elected parliament exists.

WikiLeaks cables have detailed the huge monthly stipends that every Saudi royal receives as well as various money-making schemes some have used to finance lavish lifestyles.

Analysts said the purge aimed to go beyond corruption and aimed to remove potential opposition to Prince Mohammed's ambitious reform agenda, which is widely popular with Saudi Arabia's burgeoning youth population but faces resistance from some of the old guard more comfortable with the kingdom's traditions of incremental change and rule by consensus.

In September, the king announced that a ban on women driving would be lifted, while Prince Mohammed is trying to break decades of conservative tradition by promoting public entertainment and visits by foreign tourists.

The crown prince has also slashed state spending in some areas and plans a big sale of state assets, including floating part of state oil giant Saudi Aramco [IPO-ARMO.SE] on international markets.

Prince Mohammed has also led Saudi Arabia into a two-year-old war in Yemen, where the government says it is fighting Iran-aligned militants, and a row with neighboring Qatar, which it accuses of backing terrorists, a charge Doha denies. Detractors of the crown prince say both moves are dangerous adventurism.

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Billionaire Saudi Prince Alwaleed bin Talal speaks to Reuters journalists at a hotel in Beijing, China April 5, 2007. REUTERS/Claro Cortes IV/File Photo

The most recent crackdown breaks with the tradition of consensus within the ruling family, wrote James Dorsey, a senior fellow at Singapore's S. Rajaratnam School of International Studies.

"Prince Mohammed, rather than forging alliances, is extending his iron grip to the ruling family, the military, and the National Guard to counter what appears to be more widespread opposition within the family as well as the military to his reforms and the Yemen war," he said.

Scholar Joseph Kechichian said the interests of the Al Saud dynasty, however, would remain protected.

"Both King Salman and heir apparent Mohammed bin Salman are fully committed to them. What they wish to instill, and seem determined to execute, is to modernize the ruling establishment, not just for the 2030 horizon but beyond it too," he said.

Many ordinary Saudis praised the crackdown as long-awaited.

OPULENT HOTEL

A Saudi official said former Riyadh Governor Prince Turki bin Abdullah was detained on accusations of corruption in the Riyadh Metro project and taking advantage of his influence to award contracts to his own companies.

Former Finance Minister Ibrahim al-Assaf, a board member of national oil giant Saudi Aramco, was also detained, accused of embezzlement related to the expansion of Mecca's Grand Mosque and taking advantage of his position and inside information to purchase lands, the official added.

Other detainees include ousted Economy Minister Adel Fakieh, who once played a major role in drafting MbS' reforms, and Khalid al-Tuwaijiri, who headed the Royal Court under the late King Abdullah.

People on Twitter applauded the arrests of certain ministers, with some comparing them to "the night of the long knives", a violent purge of political leaders in Nazi Germany in 1934.

Bakr bin Laden, chairman of the big Saudi Binladin construction group, and Alwaleed al-Ibrahim, owner of the MBC television network, were also detained.

At least some of the detainees were held at the opulent Ritz-Carlton hotel in the diplomatic quarter of Riyadh, said sources in contact with the government and guests whose plans had been disrupted.

The hotel's exterior gate was shuttered on Sunday morning and guards turned away a Reuters reporter, saying it had been closed for security reasons, although private cars and ambulances were seen entering through a rear entrance.

The hotel and an adjacent facility were the site of an international conference promoting Saudi Arabia as an investment destination just 10 days ago attended by at least one of those now being held for questioning.

The detentions follow a crackdown in September on political opponents of Saudi Arabia's rulers that saw some 30 clerics, intellectuals and activists detained.

Prince Alwaleed, a flamboyant character, has sometimes used his prominence as an investor to aim barbs at the kingdom's rulers.

In December 2015, he called then-U.S. presidential candidate Donald Trump a "disgrace to all America" and demanded on Twitter that he withdraw from the election.

Trump responded by tweeting: "Dopey Prince @Alwaleed_Talal wants to control our U.S. politicians with daddy’s money. Can't do it when I get elected."

His father, Prince Talal, is considered one of the most vocal supporters of reform in the Al Saud family, having pressed for a constitutional monarchy decades ago.

(Additional reporting by Reem Shamseddine in Khobar and Rania El Gamal and Tom Arnold and Sylvia Westall in Dubai; Editing by Samia Nakhoul and Nick Macfie)

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