Saudis Said to Use Coercion and Abuse to Seize Billions

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.”

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 stuck 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.

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.

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 detaineeshad “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.

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 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.

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 2005, 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.”

Content originally published on https://www.nytimes.com/2018/03/11/world/middleeast/saudi-arabia-corruption-mohammed-bin-salman.html by BEN HUBBARD, DAVID D. KIRKPATRICK, KATE KELLY and MARK MAZZETTI