Saudi Arabia invested $2bn into Kushner firm, despite panel warnings over risk

The private equity firm of Jared Kushner, the senior adviser and son-in-law to former US President, Donald Trump, received a $2 billion investment from Saudi Arabia’s sovereign wealth fund last year after he and the Trump administration left the White House, despite the fund’s panel stating that there were significant risks and that Kushner lacked experience.

According to a report by the New York Times, Kushner’s firm – Affinity Partners, which he set up in July last year after departing from politics – received the large investment from Saudi Arabia’s Public Investment Fund (PIF) after reportedly being denied investment from Qatar and the United Arab Emirates (UAE).

The paper revealed that there was initially significant reluctance to issue the investment, however, citing an internal document from 30 June which shows that an internal PIF panel, whose job it is to assess the feasibility of investment, stating after a background check that Kushner’s firm was “unsatisfactory in all aspects” and that there were “public relations risks” related to his ties with Trump.

Despite that panel’s risk assessment and statement that “they are not in favour of Project Astro [the codename for the investment proposal]”, it was overridden only days later by the PIF board which had passed a resolution to approve the deal. Since 2015, the PIF has been headed by Saudi Crown Prince, Mohammed bin Salman, who holds the final say over the fund’s decisions.

In return for the investment, according to Saudi documents seen by NYT, the PIF would receive a stake of at least 28 per cent in the firm. Not all is going well for Affinity Partners, however, as a document it prepared for the PIF board last summer stated that it aims to raise up to $7 billion.

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With the firm only having a total of $2.5 billion, confirmed by filings made with the US Securities and Exchange Commission on 31 March, it has fallen very much short of its target. This is due to the fact that potential investors have been worried about Kushner’s lack of experience in the field, which reportedly lost him investment from other Gulf States and wealth funds abroad.

The PIF board’s overruling of the internal panel’s warnings and reluctance are suspected of being a consequence of the close relationship between Kushner and Saudi Crown Prince MBS over the years, which has carried on after and beyond Kushner’s role in the former US administration.

Although it is not illegal for former US government officials to use their connections made in office to secure investment, Saudi investment into Kushner’s firm has caused outrage due to ethical concerns raised around the deal and his personal relationship with MBS.

Even a member of the board had reportedly questioned the size of the investment to Kushner’s firm, to which the fund’s staff responded in a letter on 5 July that “This investment aims to form a strategic relationship with the Affinity Partners Fund and its founder, Jared Kushner”. Any amount lower than $2 billion “may negatively or fundamentally affect the framework of the agreed strategic and commercial relationship.”

The Saudi investment may be an effort to prepare for Trump’s potential run for presidency in 2024 and a victory but, even then, there is uncertainty over whether Kushner will run alongside the Trump campaign.