Blood and Oil, page 22
Young Saudi business school graduates stood on the margins of the lobby in giddy groups. For years they’d expected that getting a serious job in finance or industry would require moving outside the kingdom. Now they were introducing themselves to the world’s most important businessmen on their home turf.
Just as surprising to the young men was a mysterious blonde strolling confidently around the Ritz in an abaya and flawless makeup. She introduced herself as Carla DiBello, an American reality TV producer and a friend—the “best friend,” she would say—of Kim Kardashian, though a Kardashian representative would later say they hadn’t talked in years. One of the young Saudi men pulled up her Instagram feed on his iPhone and scrolled through her photos posing on the beach in bikinis and flexing in skintight workout gear. “Look at her!” one of the men exclaimed to his friends.
The main events were at the Royal Court’s King Abdulaziz Conference Center, but there were smaller gatherings and lunches at the Ritz-Carlton next door. Traffic was nearly at a standstill as security guards used pole-mounted mirrors to check each car’s undercarriage for explosives.
Hundreds of journalists on the scene helped propagate rumors, spreading by the hour, about a last-minute change to the agenda. Finally, on the afternoon of the conference’s first day, Mohammed bin Salman swept in, the crowds swirling behind him.
CNBC offered a live feed of him sitting at the front of the room next to Dubai emir Mohammed bin Rashid Al Maktoum. It was the same hall where Donald Trump had given his speech months earlier. A gaggle of photographers flashed their camera bulbs as a giant screen broadcast “The Pulse of Change,” a slogan adopted by the organizers.
There was little doubt this was the most powerful businessman in the world.
Next came the video announcement for NEOM, up until then a secret. “Our ambition,” a sophisticated British-accented male voice began. “It starts with over 26,000 square kilometers of land set in an ideal location where three continents meet right at the heart of the world’s transport, trade, and telecommunications routes.”
“Here we see the birth of NEOM, the world’s most ambitious project, a destination of the future, a vision that is becoming reality.”
Fox Business’s Maria Bartiromo stood up to host the panel, wearing a long, flowing white jacket. “We watch something of a revolution happening here in Saudi Arabia as the kingdom looks to growth,” she said, inviting Mohammed bin Salman onto the stage, alongside Schwarzman of Blackstone, Son, Marc Raiburt of Boston Dynamics, and Klaus Kleinfeld, the new head of the NEOM project.
“If you allow me, I will speak in Arabic because a lot of Saudi audience here and I really respect them,” Mohammed said, before describing the “almost imaginary” opportunities at NEOM and squinting slightly as he listed its benefits, ticking them off on his hand.
The discussion had the atmosphere of a love fest, with executives praising the prince’s vision and the merits of NEOM. The most thrilling words of the day, though, were sandwiched in the middle of the panel. Bartiromo asked the prince why he was pursuing changes now, including permitting women to drive and allowing foreign investment in the country.
Mohammed, in his most charismatic public speech to date, gave an impassioned pledge to return the country back to the way it was before religious extremism began to rise in 1979. That was the year of the Grand Mosque attack and the Al Saud’s subsequent decision to appease religious conservatives with restrictions on entertainment and women’s rights. It was also the year Grand Ayatollah Ruhollah Khomeini overthrew Iran’s secular shah, showing Saudi Arabia what could happen if rulers moved too far away from powerful religious leaders.
“Saudi Arabia and the entire region witnessed the spread of an awakening project after 1979 for many reasons that are not the subject of today,” Mohammed said. “We have not been this way before. We are just going back to what we used to be: moderate, open minded Islam to the world and to all religions and to all traditions and peoples.” It was the first time a modern Saudi leader had publicly promised to wrest social control from Saudi Arabia’s clerics.
“Seventy percent of the Saudi people are less than 30 years old and frankly we will not waste 30 years of our lives dealing with any extremist ideas,” Mohammed said. “We will destroy them today and immediately.”
Headlines rolled across the world, and Saudis, who filled the room for the speech, applauded fervently.
Many in the crowd were impressed with the ambition and the scope of Mohammed’s Vision 2030 plan. The problem was that it required foreign investors to put their money behind that conviction. Just about no foreign investor wanted to put up the kind of money Saudi Arabia needed to start to stem its addiction to petrodollars. The attendees spent their days listening to talks on artificial intelligence and alternative energy, but really they were there in the hopes of extracting money from Saudi Arabia’s sovereign wealth fund.
Behind the scenes, Saudi officials were struggling. Despite the excitement and buzz, there were troubling signs on the economic front in the run-up to the event. Saudi Arabia wasn’t admitting it publicly, but the Aramco IPO plans were stagnating. Mohammed bin Salman’s first choice of the New York Stock Exchange was a problem because of the new law ratified nearly a year earlier that allowed the 9/11 victims’ lawsuit—the one Jamal Khashoggi agreed to assist with.
Royal Court advisors worried that, under the law, plaintiffs could try to get US courts to award them a chunk of Aramco if the company were to be listed on a US stock market. More broadly, Mohammed’s advisors were concerned about the frequent use in the United States of class action stockholder lawsuits where investors try to extract money from companies by suing for poor management, insufficient disclosures, or other improprieties. With its loose accounting, Aramco could be an easy target.
Trump, Jared Kushner, and other top White House officials tried to give assurances, but Aramco’s lawyers from White & Case and other advisors cautioned that a listing was too risky with the US government so polarized on nearly every issue.
Energy Minister Khalid al-Falih, a skeptic of the IPO from the start, had also allegedly been subverting efforts to list Aramco. His staff came up with valuations far short of Mohammed’s $2 trillion, along with a whole list of problems to try to convince the prince it would be folly to proceed. The plan became a battle between Mohammed and Khalid, often played out by their deputies and advisors. Bankers flew all the way to Riyadh for meetings, only to be told that a minister or royal advisor had just left the country. But they tolerated it, believing a big payout was still around the corner even though leaks in the press showed Saudi Arabia was now considering a local listing only.
NEOM was a mess too. To date, consultants had spent thousands of hours trying to turn the ideas of Mohammed and his advisors into realistic policies. But the only real structures at NEOM were palaces built by thousands of South Asian construction workers laboring around the clock. The first contractors struggled to get things moving, so the government called Saudi Binladin Group in to get the job done. A couple of years had passed since the government had frozen the company following the Mecca crane incident. The palaces were modeled after King Salman’s Tangier retreat.
Even the NEOM announcement hadn’t been properly vetted with the two countries that were supposed to be Saudi Arabia’s partners in launching it, Egypt and Jordan. Their governments were privately upset when Mohammed unveiled the plan in front of world leaders, but they decided to issue no statements at the time.
Guests at the Future Investment Initiative who professed to have a deep interest in Saudi Arabia as a long-term partner showed a sometimes shocking ignorance of its values. “Saudi has the Great Mecca,” Masayoshi Son declared at the conference. “We will create two more Meccas.” Mohammed was forced to intervene: “Please do not misunderstand his statement. Mecca became an example of an attraction center, so he means new attraction centers.” In Islam, Mecca is singular—the holiest city in the world. The idea that it was a replicable tourist attraction was deeply offensive, the kind of statement Islamic hardliners could seize upon to undermine the prince’s reforms.
Away from the big presentations, Mohammed held private meetings with Western VIPs. Swaggering New York bankers stood in line for hours to get a few minutes with the prince. When they got inside, one person who attended these meetings says, they lost their swagger. They deferentially called Mohammed “your royal highness” and complimented his great vision for the kingdom while sweat beaded on their foreheads.
Ari Emanuel, arguably Hollywood’s most powerful agent and the chief executive of Endeavor, a company formed by a merger of talent agency William Morris and sporting-event company IMG, didn’t seem to break a sweat. He’d been trying to find a way to get Saudi money for more than a year and developed a shtick to show powerful princes that he wouldn’t bend the knee. “The one thing you need to know about me,” he once told Alwaleed bin Talal, possibly Saudi Arabia’s richest royal and a man called “your royal highness” by other Americans, “I’m a motherfucker.”
Emanuel had previously started talks with the Public Investment Fund (PIF) for a $400 million investment in Endeavor. Emanuel had understood that the Saudis and his company were close to a deal. But in subsequent conversations in Saudi Arabia and Los Angeles, the PIF’s Rumayyan was noncommittal. That left Emanuel frustrated. While the prince had talked about lofty goals like creating a Saudi movie industry and investing in the future of sports and television, Rumayyan didn’t seem interested in such ambitious visions. He mainly asked about things like projections for Endeavor’s annual revenue. “Is this guy serious?” Emanuel asked an associate after one meeting. “He doesn’t know shit about entertainment.”
Then Rumayyan made a startling request: As a condition of investing, he wanted a seat on Endeavor’s board of directors—just like with Uber. Emanuel said no but suggested that maybe an advisory board could be created for him to sit on. “I need to get back to you,” Rumayyan responded, and Emanuel concluded that only with a face-to-face with Mohammed could he finalize the deal.
That’s what he planned to do during a private meeting while the Davos in the Desert conference went on in a nearby room. In a wood-paneled Ritz salon into which he was ushered to meet the prince, Emanuel sat impatiently on a gray-upholstered chair with arms covered in gold leaf, fidgeting and making small talk with the other person waiting to see the prince, Christine Lagarde, a regal, silver-haired Frenchwoman who was head of the International Monetary Fund.
When it was his turn, Emanuel marched into a chandeliered room to find Mohammed sitting in a thobe, his head uncovered. Emanuel slumped into a chair opposite the prince and outlined the terms of the deal. Saudi Arabia would invest $400 million for a stake in Endeavor. It wouldn’t get a board seat. “Okay,” Mohammed responded, and asked if he should call in Rumayyan to finalize things. “No, that’s alright,” Emanuel said. He didn’t want to bother with the underling.
Then the agent did something no one did in the crown prince’s presence: He just got up and left. The meeting was over in seven minutes, and Emanuel had his $400 million commitment.
Though the Future Investment Initiative was theoretically about getting foreigners to invest in Saudi Arabia, the news it generated was largely about Saudi Arabia investing even more in foreign companies. Rumayyan said the sovereign wealth fund aimed to have $2 trillion in investments, many of them overseas, by 2030. Branson got a $1 billion commitment for the parent of his space tourism company Virgin Galactic. Blackstone already had a commitment of $20 billion for an investment fund, and the Vision Fund was already off the ground with $40 billion from Saudi Arabia. Rajeev Misra, head of the Vision Fund, strutted around the Ritz-Carlton, holding meetings in Masayoshi Son’s huge suite and vaping nonstop.
Some international investors pledged to invest money in the kingdom, though they were mainly affiliated with countries or companies looking to build favor with the crown prince. A Russian state-backed fund said it would invest in NEOM. SoftBank promised to build the world’s biggest-ever solar-energy project and agreed to buy a stake in Saudi Electric Corporation.
In the end, the conference was seen, inside and outside Saudi Arabia, as a success. It generated a week’s worth of headlines, and the ubiquitous images on TVs and front pages around the world of Mohammed sitting with the world’s most famous financiers showed that he was a serious force with global reach. Within Saudi Arabia, it helped make the case that he was fit to be a future king. But beneath the glitz, signs of a huge upheaval began to emerge to those with a keen eye.
When the conference began, Adel Fakeih was arguably the most powerful nonroyal in Saudi Arabia. Mohammed tasked him, as minister of economy and planning, with the most crucial elements of Vision 2030. It was Fakeih’s job to hire and manage armies of consultants and to see that the prince’s ideas were turned into action. At the conference’s biggest events, a seat in the front row had Fakeih’s name on it.
But people close to the minister sensed something was wrong. He seemed anxious at a family gathering on the eve of the conference and at one point appeared to well up. He was just emotional, he said, about a young relative’s birthday. In hindsight, friends and family wondered if the minister already knew the conference was the last time he’d be seen in public.
Chapter 14
Sheikhdown
November 4, 2017
Turki bin Abdullah was sleeping when the security men arrived at his palace at dawn. The king requested his presence at an important all-hands meeting with senior Al Saud. “You have to come straight away,” a Royal Court security officer told the son of the former king.
All across the country and abroad, similar routines were underway. As motorcades wound their way to the Ritz-Carlton hotel, newly appointed as a prison for the superrich, private jet terminals were shut down and banks told to freeze any pending transactions for a list of more than 380 people, including senior royals.
The fall 2017 operation was Mohammed bin Salman’s best-choreographed move yet, even more intricate and flawless than the summit with President Donald Trump less than six months earlier. The fact that Mohammed’s team pulled it off without leaks or an intervention by powerful allies of the would-be detainees testified to the discipline of his Royal Court and the small phalanx of men in his circle of trust. This was a mission with huge opportunities for financial benefit: Tipping off a target, enabling him to preserve his wealth and freedom, could reap generous rewards. But the entire operation unfolded without a blip.
Mohammed later explained it to David Ignatius of the Washington Post as a powerful medicine to eradicate corruption. “You have a body that has cancer everywhere, the cancer of corruption,” he told him. “You need to have chemo, the shock of chemo, or the cancer will eat the body.” Jamal Khashoggi, writing for the same newspaper, unfairly called it the “Night of the Long Knives,” referencing Adolf Hitler’s brutal 1934 purge and consolidation of power that involved more than seven hundred killings.
For each prisoner at the Ritz-Carlton hotel, there was a corruption accusation. But in many cases, the incarceration also had a deeper reason. Take Turki, the late King Abdullah’s seventh son, for example. As deputy governor and governor of Riyadh from 2013 and 2015, he’d been instrumental in the long-delayed, overbudget Riyadh Metro project. Mohammed bin Salman and his investigators alleged Turki overcharged for aspects of the rail installation, pocketing huge kickbacks for himself. But the biggest reason he was in the Ritz, and treated especially harshly, was his role in trying to unseat King Salman and his son, starting even before Salman’s coronation. Turki has never publicly admitted to or been publicly charged with any crime.
To an outsider Turki seemed a lot like the crown prince. He was a senior Al Saud family member who parlayed his relationship with his father into powerful government roles and great wealth. He wanted to be king someday, and he was scheming to clear a path for himself to the throne. He was open about this around his sisters and brothers. Sitting in the huge dining rooms of one Abdullah clan member or another, Turki and his siblings would talk about how he should one day be king—and how Salman never should have been king at all. They viewed Salman, with his close ties to clerics Abdullah had wanted to sideline, as a religious fundamentalist, a man obsessed with keeping tabs on his relatives’ transgressions and exacting revenge on those who behaved in ways he disliked.
But to Mohammed, it was Turki who embodied deep problems within the Al Saud. MBS believed he demanded kickbacks from foreign companies and involved himself in shady overseas deals, including Malaysia’s 1Malaysia Development Berhad scandal. Turki denied it all, but Mohammed had little patience for princes who he believed brazenly took their money-making schemes overseas.
He also loathed the idea that every son, grandson, or great-grandson of Ibn Saud had the right to behave in such a way. The king and his sons rightfully controlled the country’s wealth and could buy yachts or mansions, Mohammed maintained. But farther-flung royals should maintain a lower profile, not speed around in their Bugattis acting important—if only because the number of such princes grew exponentially with each generation and pretty soon the kingdom wouldn’t be able to afford it. It was a notion that Turki’s father, King Abdullah, had instilled in the royal family when he cut princes’ allowances and one that Mohammed had internalized. He felt that he, and not Abdullah’s sons, was Abdullah’s spiritual heir and the one with the guts to aggressively implement the reforms the old king couldn’t see out before he died. “I’m a disruptive King Abdullah,” Mohammed told friends.
