Tue, Nov 21, 2017 - Page 6 News List

Saudi settlements could recover up to US$100 billion

Bloomberg

Saudi authorities estimate they might be able to recover between US$50 billion and US$100 billion from settlement agreements with suspects detained in an anti-corruption crackdown that has implicated prominent princes, officials and billionaires, a senior official said.

Suspects are being offered settlements to avoid trial, the official said, requesting anonymity to discuss the ongoing investigation.

If they accept, talks are held with a special committee to work out the details.

Payments are based on the amounts authorities believe suspects have amassed illegally, not their entire wealth, the official said.

The purge, which saw royals and billionaires such as Prince Alwaleed bin Talal detained, shook the kingdom and reverberated abroad as diplomats, bankers and analysts sought to figure out its impact on wealthy clients, as well as the struggle for power in the world’s biggest oil exporter.

Prince Miteb bin Abdullah was held in the crackdown and also fired from his post as head of the powerful Saudi Arabian National Guard, a move that reinforced speculation that King Salman was preparing the ground to hand over power to his son and heir, Crown Prince Mohammed bin Salman.

The purge has widened to the military.

The senior official said 14 retired officers who worked at the Saudi Ministry of Defense and two retired National Guard officers had been detained on suspicion of being involved in financial contracts that were deemed corrupt.

No active-duty officers have been arrested, he said.

The crackdown comes at a delicate time for Saudi Arabia, which is grappling with the worst economic slowdown since 2009 as well as political unrest in the region, stirred in no small part by Prince Mohammed’s aggressive foreign policy to counter Iran’s influence.

In the past two years, the prince has thrust Saudi Arabia into war in Yemen and led a regional boycott of Qatar.

The purge will likely impact already sluggish private investment, hitting economic growth next year, said Ziad Daoud, a Dubai-based economist at Bloomberg Economics.

“This hit from investment to growth is potentially large. Investment globally tends to be volatile and subject to sharp changes in sentiment, and Saudi Arabia is no exception,” he wrote in a note.

While settlements in corruption cases are not uncommon globally, Saudi Arabia lacks the transparent institutional mechanisms that are used elsewhere to determine financial penalties.

Funds recouped from the settlement talks are unlikely to provide much support to the central bank’s foreign-currency reserves, which have plummeted by about US$260 billion from their peak in 2014, said Jean-Michel Saliba, London-based economist at Bank of America Merrill Lynch.

Saudi Arabia’s market regulator has frozen the trading accounts of people detained or investigated, people familiar with the matter have said.

Saudi authorities allege at least US$100 billion has been siphoned off over decades through corruption and embezzlement.

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