A year after the murder of Jamal Khashoggi, big companies return to Saudi Arabia
A year after the murder of Jamal Khashoggi, major overseas companies are heading back to the kingdom
When Saudi Arabia hosted a high-profile investment conference just weeks after the killing of Jamal Khashoggi last October, top executives from some of the world’s biggest financial companies begged off, over fears of negative publicity.
A year later, human rights advocates say the kingdom has yet to deliver justice, failing to hold senior Saudi officials responsible for the
Washington Post columnist’s killing. But business leaders have been far more forgiving.
In a few weeks, senior executives from blue-chip firms including Goldman Sachs, JPMorgan Chase, Citigroup and BlackRock will be returning to the kingdom for the conference, dubbed “Davos in the Desert,” according to an attendees list reviewed by the Washington Post.
More than 150 executives have confirmed their attendance, the list shows. The head of Russia’s sovereign wealth fund is attending, as well as other executives who represent major banks, business conglomerates and defence contractors in India, the Middle East, Europe and the United States.
Jared Kushner, a senior White House adviser and President Donald Trump’s son-in-law, is also expected to lead a US delegation, according to a person briefed on his plans.
Larry Fink, BlackRock’s chief executive who withdrew last year from the Future Investment Initiative event, has framed his decision to return to Saudi Arabia as an effort to promote change in the kingdom.
“I believe greater economic integration and diversification will help Saudi Arabia build a more modern and sustainable economy,” Fink wrote on his LinkedIn page. “I also believe that corporate engagement and public dialogue can help with that evolution.”
Over the past year, Saudi Arabia has worked tirelessly to change the subject after Saudi agents killed Khashoggi in the nation’s consulate in Istanbul, in a plot that the CIA concluded with high confidence was approved by Crown Prince Mohammed bin Salman.
Since Khashoggi’s murder, the Saudi government has promoted high-profile entertainment events featuring Western artists, rolled back restrictions on women’s rights and recently announced that tourists from the US and other countries can obtain visas to visit attractions in Saudi Arabia for the first time.
As it tries to turn the page, the Saudi government has been able to count on influential allies, including business and political leaders. Trump has been the crown prince’s most prominent defender, arguing the US partnership with Saudi Arabia and US arms sales to the kingdom should not be threatened by Khashoggi’s killing.
Banking leaders have also had a powerful incentive to keep relations cordial with Saudi Arabia — namely, the hotly anticipated initial public offering by Aramco, the national oil company. Analysts have estimated the company could have a valuation between US$1.5 trillion to US$2 trillion, and the crown prince has said he would like to list as much as 5 per cent of Aramco.
The Wall Street Journal reported this month that Aramco had chosen nine banks to underwrite its listing, including JPMorgan Chase, Goldman Sachs and Citigroup, whose senior executives were expected to attend the investment conference, according to the list obtained by the Post.
Rob Runyan, a spokesman for Citigroup, declined to comment on whether Michael Corbat, the company’s chief executive, who was included on the list, planned to attend the conference. Brian Marchiony, a spokesman for JPMorgan Chase, declined to comment on the attendance of Carlos Hernandez, the firm’s head of global banking, who was also on the list.
“I think most people have moved on,” says Karen Young, a resident scholar at the American Enterprise Institute.
At the same time, Saudi Arabia is still struggling to attract foreign investment, for reasons that are not linked to bad publicity because of human rights abuses or any political event, she says.
Foreign investment in Saudi Arabia had already dipped to historic lows by late 2017, when the government rounded up hundreds of Saudi business executives and some royal family members and imprisoned them at the Ritz-Carlton hotel in Riyadh, in what the government billed as an “anti-corruption” drive.
Since Khashoggi’s death a year ago, foreign investment in the kingdom has actually increased slightly, says Young, citing the gradual easing of capital flight and moderate steps taken by the Saudi government to improve the business environment.
For investors, “there is always a consideration of political risk,” but such investors are likely to be far more concerned with recent attacks on Saudi oil facilities — blamed by US and Saudi officials on Iran — than the negative publicity generated by Khashoggi’s murder.
A cheery invitation to the Future Investment Initiative, sent by Yasir alRumayyan, the head of Saudi Arabia’s sovereign wealth fund who was recently named as the chair of Aramco, promises “unparalleled networking among CEOs, world leaders, and experts”.
Adam Coogle, a Middle East researcher for Human Rights Watch, says engagement by foreign companies with Saudi Arabia is unlikely to alter the kingdom’s harsh treatment of dissidents and rights activists. “The notion that the mere presence of more international companies would translate into human rights reforms is pretty naive,” he says.
“So far, there have been virtually no improvements on major issues such as freedom of expression, rule of law or political participation, and I could make a compelling argument that these areas have gotten worse under MBS,” he adds, referring to the crown prince by his initials.
Saudi officials have insisted they are seeking accountability for Khashoggi’s killing, pointing to the prosecution of 11 individuals they say are linked to the murder. The public and journalists have been barred from attending the trials of the 11 defendants, though diplomats have been allowed to attend, along with a representative from Turkey.
One sector that appears to be staying away from the investor conference is Silicon Valley. Last year, representatives from Google, Uber and other tech firms had planned to attend before news of Khashoggi’s murder prompted them to cancel.
Conspicuously absent from the attendees list is Masayoshi Son, founder and chief executive of SoftBank, a mammoth venture capital firm that was launched with significant financial support from the Saudi sovereign wealth fund. Last year Son cancelled his attendance of the event. Instead, he stayed at a nearby hotel and held meetings with others who attended.
Son has grappled with his Saudi investors over who calls the shots in the US$100 billion Vision Fund, according to a person familiar with the relationship. For instance, Uber and Slack, which both received large cash infusions from the Vision Fund, have seen their stock prices plummet following highly anticipated initial public offerings this year. SoftBank is also the main backer of WeWork, whose chief executive recently resigned after delaying the company’s public listing because of poor financial performance.
Other technology financiers and entrepreneurs contacted by the Post say they have no plans to attend the Saudi conference, largely because an abundant flow of money already available in the tech industry makes funding from the kingdom unnecessary and not worth the public relations headache.
If technology leaders do stay away, it will undermine one of the principal aims of the conference: “positioning technology investments at the forefront of Saudi Arabia’s economic transformation,” according to Robert Mogielnicki, a resident scholar at the Arab Gulf States Institute in Washington.
But the conference has other important aims, he adds, including proving the Saudi economy’s ability to bounce back after “successive political and economic storms”.
For the Saudis, “the big issue is conveying the message that the country is safe, and the event is safe to visit”. The strikes on the oil installations, along with attacks by a rebel group in Yemen targeting airports and other infrastructure primarily in southern Saudi Arabia, “calls into question the security of the state,” he says.
The success of the conference also hinges on the kingdom’s ability to generate excitement around other initiatives, including the Aramco IPO, and entertainment and tourism projects. “Around non-Jamal Khashoggi related news,” Mogielnicki says.
So far, there have been virtually no improvements on major issues such as freedom of expression, rule of law or political participation.
Adam Coogle, Human Rights Watch