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Khashoggi: the Saudi crisis continues

November 21, 2017 at 3:49 am

Saudi billionaire Prince Al-Waleed detained in corruption inquiry – Cartoon [Sabaaneh/MiddleEastMonitor]

Political analyst Jamal Khashoggi has said that Saudi Arabia is now quietly witnessing “billion-dollar settlements with a number of non-arrested princes, under which the funds of the Ministry of Finance will be recovered, and lands’ shares and properties will be transferred to the state.”

The Saudi website, Sabq, said that the Saudi General Auditing Bureau (GAB) has issued a report which revealed huge financial irregularities in one of the sectors of the Ministry of National Guard including violations in the systems, regulations, payroll, allowances and financial benefits as well as recruitment and contracting.

The website said that among the irregularities that the GAB’s report has monitored was the payment of an administrative allowance of 236 thousand riyals. It stated that one of the administrators was paid more than 99,000 riyals as a monthly salary in addition to other salaries ranging from 70 to 63 thousand riyals. As for those who work in the field of healthcare, some earn more than 87 thousand riyals and others earn between 86 and 81 thousand riyals. Some of the pharmacists in this field earn salaries of more than 50 thousand riyals.

Recovered funds expected

Concerning reimbursing funds from the detainees, a prominent Saudi official revealed that Saudi Arabia expects to recover between 50 and 100 billion dollars from the settlement deals with those arrested in the anti-corruption campaign, which has shown that prominent princes, officials, and billionaires have been involved in corruption.

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The US Bloomberg News Agency quoted the official, as saying that the authorities had offered the suspects compromises to avoid the trial. If they agree, discussions would be held with a special committee to determine the details.



The purge has also reached the army. The senior official said that the Saudi authorities arrested 14 retired military officers who had served in the Ministry of Defence, and two retired National Guard officers on suspicion of being involved in financial contracts which were deemed corrupt. He added that no officer currently serving in the military had been arrested.

This campaign comes at a sensitive time for Saudi Arabia, which has an absolute monarchy and has been suffering from the worst economic slowdown since 2009, as well as the political unrest in the region, which is mainly caused by Prince Mohammad’s aggressive foreign policy to counter Iran’s influence.

In the past two years, the prince has thrown Saudi Arabia into a war in Yemen and has led a regional blockade against the neighbouring state of Qatar.

At the local level, Prince Mohammad’s post-oil plan has seen the authorities’ cut of support and announcement of plans to sell state assets to the general public, including Aramco, the large Saudi Arabian Oil Company.


Ziad Daoud, an economist at The US Bloomberg Economic News Agency who lives in Dubai, wrote in a memo that the purge operation is likely to affect private investment that is already witnessing recession, which would negatively affect economic growth next year (2018).

He added: “This investment’s negative impact on economic growth is likely to be significant. Global investment tends to fluctuate and undergo sharp changes in orientations, and Saudi Arabia is no exception.”

In light of absence of compromises on global corruption issues, Saudi Arabia lacks the transparent institutional mechanisms which are used in other countries to determine financial sanctions. It is worth mentioning that the authorities said that the accused figures will get their legal rights.

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Jean-Michel Saliba, an economist at the Bank of America – Merrill Lynch, who lives in London, said it is unlikely that the recovered funds would provide a significant support to the central bank’s foreign exchange reserves, which fell by about 260 billion dollars from their highest levels in 2014.

Saliba wrote that international stocks in Saudi private companies, except banks and investment funds, have not exceeded 100 billion dollars at the end of 2015. He added: “We expect only a small portion of these stocks to be compromised in this investigation.”

The Saudi Arabian Capital Market Authority (CMA) has frozen the trading bank accounts of the detained or investigated people, according to insiders of this matter. Saudi authorities claimed that at least 100 billion dollars have been embezzled or corrupted over decades.

Limited-scope operation

On Thursday, November 16th 2017, the Saudi Minister of Energy, Industry, and Mineral Resources, Khalid Al-Falih, said that the purge would not affect foreign investment or the kingdom’s plan for the initial public offering of its oil company.

On the sidelines of the climate conference in Bonn, Germany, Al-Falih told reporters: “I am in contact with many foreign investors, and everyone knows that this is a very limited local issue. All in all, the government is conducting a long-awaited internal purge process.”