RIYADH,
Saudi Arabia — Businessmen once considered giants of the Saudi economy
now wear ankle bracelets that track their movements. Princes who led
military forces and appeared in glossy magazines are monitored by guards
they do not command. Families who flew on private jets cannot gain
access to their bank accounts. Even wives and children have been
forbidden to travel.
In November, the Saudi government locked up hundreds of influential businessmen — many of them members of the royal family — in the Riyadh Ritz-Carlton in what it called an anti-corruption campaign.
Most
have since been released but they are hardly free. Instead, this large
sector of Saudi Arabia’s movers and shakers are living in fear and
uncertainty.
During
months of captivity, many were subject to coercion and physical abuse,
witnesses said. In the early days of the crackdown, at least 17
detainees were hospitalized for physical abuse and one later died in
custody with a neck that appeared twisted, a badly swollen body and
other signs of abuse, according to a person who saw the body.
In an email to The New York Times on Sunday, the government denied accusations of physical abuse as “absolutely untrue.”
To
leave the Ritz, many of the detainees not only surrendered huge sums of
money, but also signed over to the government control of precious real
estate and shares of their companies — all outside any clear legal
process.
The government has yet to actually seize many of the assets, leaving the former detainees and their families in limbo.
One
former detainee, forced to wear a tracking device, has sunk into
depression as his business collapses. “We signed away everything,” a
relative of his said. “Even the house I am in, I am not sure if it is
still mine.”
As
the architect of the crackdown, Crown Prince Mohammed bin Salman,
prepares to travel to the United States this month to court American
investment, Saudi officials are spotlighting his reforms: his promise to
let women drive, his plans to expand entertainment opportunities and his moves to encourage foreign investment. They have denied any allegations of abuse and have portrayed the Ritz episode as an orderly legal process that has wound down.
But
extensive interviews with Saudi officials, members of the royal family,
and relatives, advisers and associates of the detainees revealed a
murkier, coercive operation, marked by cases of physical abuse, which
transferred billions of dollars in private wealth to the crown prince’s
control.
Corruption has long been endemic in Saudi Arabia,
and many of the detainees were widely assumed to have stolen from state
coffers. But the government, citing privacy laws, has refused to
specify the charges against individuals and, even after they were
released, to clarify who was found guilty or innocent, making it
impossible to know how much the process was driven by personal score
settling.
Part of the campaign appears to be driven by a family feud, as Crown Prince Mohammed presses the children of King Abdullah, the monarch who died in 2015, to give back billions of dollars that they consider their inheritance, according to three associates of the Abdullah family.
And
although the government said the campaign would increase transparency,
it has been conducted in secret, with transactions carried out in ways
that avoid public disclosure, and with travel bans and fear of reprisals
preventing detainees from speaking freely.
Most
people interviewed for this article spoke on the condition of anonymity
to avoid the risk of appearing to criticize Crown Prince Mohammed.
The
government said in its email that “the investigations, led by the
Attorney General, were conducted in full accordance to Saudi laws. All
those under investigation had full access to legal counsel in addition
to medical care to address pre-existing, chronic conditions.”
The government, and several Saudi officials contacted separately, declined to answer further questions about the crackdown.
They
have argued, however, that it was a necessarily harsh means of
returning ill-gotten gains to the treasury while sending a clear message
that the old, corrupt ways of doing business are over. And they have
defended the process as a kind of Saudi-style plea bargain in which
settlements were reached to avoid the time and economic disruption of a
drawn-out legal process.
In
a separate statement on Sunday announcing new anti-corruption
departments in the Attorney General’s office, the government said that
King Salman and Crown Prince Mohammed “are keen to eradicate corruption
with utmost force and transparency.”
But the opaque and extralegal nature of the campaign has rattled the very foreign investors the prince is now trying to woo.
“At
the start of the crackdown they promised transparency, but they did not
deliver it,” said Robert Jordan, who served as American ambassador to
Saudi Arabia under President George W. Bush. “Without any kind of
transparency or rule of law, it makes investors nervous that their
investments might be taken and that their Saudi partners might be
detained without any rationale to the charges.”
A Five-Star Jail
Before dawn on Nov. 4, Prince Alwaleed bin Talal, the kingdom’s most famous investor
and one of the world’s richest men, was asleep at a desert camp where
he repairs to relish the simple life when he was summoned by the royal
court to see King Salman, according to two associates of his family. It
was a strange request for that hour, but one does not ignore the king’s
wishes, so he returned to Riyadh, where his guards were dismissed, his
phones taken from him and he was locked in the Ritz.
Over the next 24 hours, similar calls lured in more than 200 people,
including some of the kingdom’s wealthiest and most powerful men. They
included Prince Mutaib bin Abdullah, a son of King Abdullah and head of
one of the country’s three main security services; Fawaz Alhokair, who
owned the kingdom’s franchises of Zara, the Gap and dozens of other stores;
Salah Kamel, an elderly businessman from the Red Sea port city of
Jidda; and many other princes, businessmen and former government
officials.
Most
ended up in the Ritz, in rooms whose glass shower doors and curtain
rods had been removed to prevent suicide attempts. They could watch
television and order room service, but had no internet or phones.
Outside,
their relatives panicked, and managers of their far-flung businesses
drew up contingency plans to keep operations running, unsure of how long
their bosses would be gone.
Eventually, the detainees were allowed to reassure their families through short, monitored calls.
Many
were prevented from contacting their lawyers, but Prince Alwaleed spoke
weekly with some of his managers, his associates said. He remained out
of public sight until January, when the royal court allowed a journalist
from Reuters to interview him in the Ritz to counter a BBC report that he was being kept in a cell-like room.
“Rest
assured that this is a clean operation that we have,” the prince told
Reuters, having visibly lost weight and grown a beard. “There is a
misunderstanding and it is being cleared.”
The video struck many who knew the prince as strange.
“It
looked artificial in many ways,” said Mr. Jordan, the former
ambassador, who has met the prince many times, most recently last April.
Within a few hours, he was released, but even close associates say they do not know what agreement he made with the government.
Turki Shabanah, the chief executive of a television network
owned by Prince Alwaleed, said that he had spoken with the prince by
phone several times while he was detained and had seen him frequently
since.
He
said he had “no idea” if the prince had reached any kind of settlement
with the government, but he endorsed the crackdown on corruption as long
overdue.
“The
way it was was not normal, not for Saudi investors nor for foreign
investors,” he said. “The system needed that shock to clear the past and
start a new future.”
Representatives of Prince Alwaleed’s company, Kingdom Holding,
declined to make him available for an interview, but two associates of
his family said he is under armed guard. He has told very few people, if
anyone, what happened to him in the Ritz.
“It is something he wants to forget,” one associate said.
Reports of Abuse
In
the early days of the Ritz detentions, as many as 17 detainees required
medical treatment for abuse by their captors, according to a doctor and
an American official.
Relatives
of some of the detainees said they were deprived of sleep, roughed up
and interrogated with their heads covered while the government pressured
them to sign over large assets.
Evidence
of such abuse has been slow to emerge, but officials from two Western
governments said they deemed the reports credible.
One
case involved a Saudi military officer who died in custody. One person
who saw the corpse of the officer, Maj. Gen. Ali al-Qahtani, said that
his neck was twisted unnaturally as though it had been broken, and that
his body was badly bruised and distended. His skin showed other signs of
physical abuse, the person said.
A
doctor and two other people briefed on the condition of the body said
that it had burn marks that appeared to be from electric shocks.
In
the emailed response to questions about General Qahtani, an official of
the Saudi Embassy in Washington said, “All allegations of abuse and
torture of those investigated during the anti-corruption proceedings are
absolutely untrue.”
The official added that the detainees had “full access” to legal counsel and medical care.
General
Qahtani, an officer in the Saudi National Guard who was believed to be
about 60, was not wealthy himself, so his value as a major
anti-corruption target is questionable. But he was a top aide to Prince
Turki bin Abdullah, a son of the late King Abdullah and a former
governor of Riyadh, and the interrogators may have been pressing the
general for information about his boss, Prince Turki. The members of
King Abdullah’s family are seen as rivals of Crown Prince Mohammed and
his father, King Salman.
In
November, General Qahtani was taken to an elite hospital near the hotel
for radiological scans and other treatment, where he showed signs of
having been beaten, according to a doctor briefed on his condition.
He was returned to the hotel for further interrogation, and later pronounced dead at a military hospital.
The kingdom has never publicly provided an explanation of the general’s death.
Members
of the Qahtani and Abdullah families have been afraid to discuss the
general’s death publicly for fear of further retribution, several people
who have spoken to them said.
Another
of the late king’s sons, Prince Mishaal bin Abdullah, complained about
General Qahtani’s treatment to a circle of friends, and immediately
afterward Prince Mishaal, too, was arrested and locked in the Ritz.
Foreign Aid
Whatever
pressure was applied in the Ritz, the goal was to get detainees to sign
over assets. In some cases, the government brought in prominent
international firms to help.
Crown Prince Mohammed first expressed interest in buying the Arab world’s largest private media company, MBC, in 2015, according to three associates of the company’s leadership. Although not considered highly profitable, MBC owns a range of satellite television stations
beaming shows like “The Voice” and “Arabs Got Talent” into millions of
homes, and the company has tremendous power to sway Arab public opinion.
Negotiations
over the sale had bogged down when a team from the international
accounting firm PWC arrived to vet the company’s books in October.
The
company’s owners and most of its board were arrested and detained on
Nov. 4. Four days later, PWC’s accountants visited the company’s
headquarters in Dubai to finish their report, according to two
professionals with knowledge of the meeting.
Then
a second foreign firm, the British law firm Clifford Chance, drew up
the paperwork to transfer the company’s ownership, according to three
professionals with knowledge of the deal.
Neither firm publicly raised any concerns that the sellers had been detained by the buyer.
A
spokesman for Clifford Chance declined to comment, but one Clifford
Chance lawyer involved in the work sought to distance the firm from the
crackdown, saying its lawyers were retained after the detentions began
and learned about them only from the news media.
One
PWC accountant involved in the MBC valuation declined to comment. But
another executive, speaking on the condition of anonymity because of
client confidentiality rules, said PWC had played no role in helping the
kingdom track the assets of those accused of corruption.
No
set code of ethics governs the conduct of accounting and consulting
firms in international cases but Western firms like PWC typically preach
the virtues of predictable rules, transparent procedures and open
markets, not state seizures of private assets.
British
law firms like Clifford Chance are subject to Britain’s legal ethics
code, which requires solicitors to uphold “the rule of law and the
common administration of justice.”
Stephen
Gillers, an expert on legal ethics at New York University, said lawyers
would not be penalized as long as they adhered to local laws — in this
case, those set by the Saudi monarch.
“Lawyers
take the position that so long as they comply with the law in the
nation in which they are representing their clients, they’re acting
ethically, even if the same conduct would be illegal or unethical in
their home country,” he wrote in an email.
Still, he said, “lawyers can decline to assist conduct that they find morally objectionable even if it is entirely legal.”
Waleed al-Ibrahim, MBC’s chairman, was released from the Ritz
in late January, but has yet to return to Dubai, despite promises to
his staff. In recent weeks, MBC representatives have met with Clifford
Chance lawyers to finalize an agreement that will leave Mr. Ibrahim with
40 percent of the company, likely paving the way for his ouster as
director, according to two professionals with knowledge of the deal.
But
the company’s programing has already changed. This month, it canceled
six popular Turkish drama series, costing the company about $25 million,
according to professionals familiar with the company’s finances.
The Saudi government is at odds with Turkey over its ties with Qatar, which Saudi Arabia and its allies are boycotting. The professionals said the order came from a senior Saudi official close to Crown Prince Mohammed.
The Haul
The kingdom’s public prosecutor said in January that the government had reached settlements worth $106 billion, and other officials have said they expect the process to yield $13 billion in cash by the end of 2018.
But
separating those two figures is the fact that relatively little cash
was seized, either because the detainees did not keep large sums in
Saudi banks or because they hid their cash abroad, where the government
could not take it without a substantive legal process. There have been
no clear indications that the government seized any foreign investments
in the kingdom, nor succeeded in taking Saudi assets held abroad.
Most
of the seized assets, according to financial advisers and associates of
the detainees, were domestic real estate and shares of companies, which
the government is expected to liquidate over time, a process that could
take years.
Citing
privacy laws, the government has given no information on what was taken
from whom, but interviews with associates of the former detainees have
filled in some details.
The
government has taken management control of Saudi Binladen Group, the
construction giant founded by Osama bin Laden’s father that for decades
has served as the royal family’s go-to contractor. Its chairman, Bakr
Binladen, remains detained, and his relatives have lost much of their
private wealth.
Large
sums and pieces of land have been taken from Mohammed al-Tobaishi, the
former head of protocol of the royal court; Fawaz Alhokair, a retail
tycoon; Khalid al-Tuwaijery, a former chief of the royal court; Adel
Fakieh, a former government minister who helped Prince Mohammed develop
his reform plans; and Amr Dabbagh, the former head of the government
body that oversees foreign investment.
Royal Rivalry
One
target is the wealth of the offspring of King Abdullah, the previous
monarch. They were seen as potential rivals for the Saudi throne and
since Salman became king in 2015, he and the crown prince have moved to
sideline them.
One
of Abdullah’s sons, Prince Turki, was removed from his post as the
governor of Riyadh in 2015, while another, Prince Mutaib, was dismissed
as the head of the National Guard in November. Both men, and a number of
their brothers, were detained in the Ritz.
King Abdullah left tens of billions of dollars in the Abdullah Foundation,
which was meant to finance projects in the king’s name while also
serving as a piggy bank for his heirs, according to three associates of
his family. After he died in 2015, the foundation paid out billions of
dollars to his more than 30 children, about $340 million to each son and
$200 million to each daughter.
The
crown prince is seeking to recover that money, which he believes was
taken illegally from a charity, according to people familiar with the
negotiations. King Abdullah’s children, however, consider it their
inheritance.
The
foundation’s administrator is Prince Turki, whose aide, General
Qahtani, died in custody. Prince Turki is still detained and most of his
siblings and their families are banned from traveling outside the
kingdom. Others are abroad in London and elsewhere, afraid to return to
the kingdom that their father recently ruled.
According
to one relative and two associates of the Abdullah family, his children
are allowed to withdraw $26,000 per week each from their accounts to
cover their expenses.
The
government said in January that 56 people are still being held because
of “pending criminal cases” and will be put on trial. Anyone who
preferred to challenge the corruption accusations in court had the right
to do so, the government says.
Those
who have been released say they are not really free. They have kept low
profiles, unsure when the government will take the assets they signed
away in the Ritz.
Most
are barred from travel and cannot obtain access to their financial
accounts. Some detainees believe the ankle bracelets they are wearing
that track their movements also transmit their conversations. Some cover
the trackers with pillows or play loud music to deter potential
eavesdroppers, people who have visited them say.
“They
want to pressure you and your kids so that you will sell your assets to
be allowed to travel again,” one relative of a released detainee said.
“It is the same inside and outside of the Ritz.”
But
they have little recourse because what remains of their lives and
fortunes, as well as the well being of their families, depends on their
standing in Saudi Arabia.
“No
one can talk about what happened in the Ritz,” said one associate of a
former detainee. “In the end, they all have to live in Saudi Arabia.”
Correction: March 12, 2018
An earlier version of this article misstated when Salman became king of Saudi Arabia. It was in 2015, not 2005.
An earlier version of this article misstated when Salman became king of Saudi Arabia. It was in 2015, not 2005.
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