Saudi Wealth Remains Hidden as Government Pursues $100 Billion

(Bloomberg) -- When the Riyadh Ritz-Carlton starts accepting guest bookings next month, it will be the end of the luxury hotel’s stint as a prison for Saudi Arabian princes, billionaires and dignitaries accused of corruption. It also closes the door on a rare glimpse into the enduring mystery of private wealth in the oil-rich kingdom.

The Bloomberg Billionaires Index, a daily ranking of the world’s 500 richest people, has documented 15 individuals with a combined net worth of $63 billion from Saudi Arabia, a nation of 32 million. In Canada, which has a population of 36 million, the index has counted 31 with a combined $171 billion. In Singapore, a city-state of only 5.6 million people, the index tallies 14 with $85 billion.

The government’s goal of recouping up to $100 billion from the princes and businessmen detained in the purge suggests there may be a lot more wealth hidden in Saudi Arabia. The amount is about equal to the funds it says has been drained from state coffers through corruption.

“Personal wealth is extremely private there,” said Marcus Chenevix, an analyst at investment research firm TS Lombard in London. “It’s no one’s business."

There are two Saudi royals on the Bloomberg index: Prince Alwaleed bin Talal, who owns publicly traded investment group Kingdom Holding, and Prince Sultan bin Mohammed Al Kabeer, chairman of the country’s biggest dairy company, whose sons were among a group of princes arrested for staging an alleged unlawful protest earlier this month.

Prince Miteb bin Abdullah, former head of the National Guard, paid more than $1 billion for his release three weeks after the November purge. His name wasn’t on any of the world’s wealth rankings at the time. Alwaleed, a backer of Twitter Inc. and Citigroup Inc., could be on the hook for $6 billion.

Crown Prince Mohammed bin Salman, the man behind the crackdown, has been linked to some lavish spending of his own, reportedly dropping more than $1.2 billion on personal assets that include a mansion bought in 2015, a yacht and a Leonardo Da Vinci painting that sold for $450 million, 12 days after he began the purge.

Royal Revenue

Tracking the nation’s billionaires is unusually difficult because financial disclosures are scant. Take the royal family. Thousands of members have probably been receiving stipends from oil in some form since it was first discovered in the 1930s. The income stream could represent a cumulative windfall of more than $260 billion, according to Bloomberg calculations. The payments aren’t detailed in the Saudi budget and are likely doled out before being distributed to the Saudi Arabian Oil Co., say experts, making it virtually untraceable.

Other common avenues of royal self-enrichment have included acting as agents or silent partners for foreign companies, or trading property, where their advantage lies in easy access to the government’s land bank. A leaked 1996 cable published on Wikileaks detailed some of the more nefarious tactics, like defaulting on bank loans and managing “off-budget” state programs.

The true extent of Saudi wealth may even be a mystery to the government itself, which imposes no taxes on income or wealth, so has no reason to assess the personal finances of its citizens. Identifying royals who’ve amassed the kind of wealth that would put them among the world’s richest people is possible only if they break out with a business that’s public or otherwise discloses financials, a rarity for closely held Saudi companies.

“In most societies, wealth gets exposed because people want to expose who’s behind it,” said TS Lombard’s Chenevix. “But if the politicians are the wealthy, if wealth and power are the same thing, that political pressure doesn’t exist.”

--With assistance from Glen Carey

To contact the reporter on this story: Devon Pendleton in London at dpendleton@bloomberg.net.

To contact the editors responsible for this story: Robert LaFranco at rlafranco@bloomberg.net, Alan Goldstein

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