Scores of companies back away from Saudi business over Khashoggi

October 25, 2018

A number of businesses and investors are backing away from doing business with Saudi Arabia until more answers are provided on the disappearance of Washington Post journalist Jamal Khashoggi, whom Turkish officials believe was murdered inside the Saudi Consulate in Istanbul on October 2.

According to an October 23 report by Axios, many of the world’s largest prospective financial deals involve Saudi Arabia and are predicated on trust in Saudi Crown Prince Mohammed bin Salman (MBS) as a reformer. Meanwhile, there is speculation that MBS was personally involved in Khashoggi’s disappearance.

In the three weeks since Khashoggi’s disappearance, several companies and individuals have pulled out of Saudi Arabia’s Future Investment Initiative (FII), a massive conference nicknamed “Davos in the Desert.” The meeting is being hosted by MBS and the kingdom’s sovereign wealth fund from October 23-25 at the Ritz-Carlton Hotel in Riyadh.

The conference is described by The New York Times as “an extravagant embodiment of Crown Prince Mohammed’s dream to modernize Saudi Arabia and wean it off its reliance on oil by 2030.

Indeed, the Times reported, on the first day of the meeting, MBS presented a blueprint for Neom, a $500 billion planned city that would rise from the desert as a futuristic Zanadu of high-tech jobs and robot workers.

Unfortunately, fewer investors than planned will be on hand to support that vision. According to Axios, the following business, financial, and government invitees have pulled out (in chronological order):

And the list goes on, including about three dozen more high-profile names—among them, J.P. Morgan Chase CEO Jamie Dimon, BlackRock CEO Larry Fink, Blackstone CEO Stephen Schwarzman, Ford Chairman Bill Ford, MasterCard CEO Ajay Banga, Sotheby CEO Tad Smith, HSBC CEO John Flint, Credit Suisse CEO Tidjane Thiam, Standard Chartered CEO Bill Winters, Managing Director of the International Monetary Fund Christine Lagarde, President of the New York Stock Exchange Stacey Cunningham, U.S. Treasury Secretary Steve Mnuchin, U.K. Trade Secretary Liam Fox, French Finance Minister Bruno Le Maire, and Dutch Finance Minister Wopke Hoekstra.

In addition, several major Saudi supporters who are based in the United States and Europe have cut ties with the Kingdom:

  • Richard Branson, billionaire entrepreneur and founder of Virgin Group, announced on October 18 that he would suspend his directorships of two Saudi tourism projects and is suspending talks of a $1 billion investmentwith the country, saying: “What has reportedly happened in Turkey around the disappearance of journalist Jamal Khashoggi, if proved true, would clearly change the ability of any of us in the West to do business with the Saudi Government.”
  • Ernest Moniz, former energy secretary under President Obama, is suspending his involvement advising Saudi Arabia on its $500 billion smart city project.
  • Neelie Kroes, a Neom board member and former vice president of the European Commission, said she would suspend her role in the project until more is known.

The conference already has started, with fewer speakers scheduled to be heard.

Research contact: zach.basu@axios.com

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