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Saudi Crackdown Escalates With Arrests of Top Military Officials

The Wall Street Journal. logo The Wall Street Journal. 11/17/2017 Summer Said, Margherita Stancati

Authorities in Saudi Arabia are widening a corruption probe that has reached the upper echelons of the royal family and entangled prominent businessmen who are now being asked to surrender assets in exchange for their freedom, according to two people familiar with the matter.

At least two dozen military officers, including multiple commanders, recently have been rounded up in connection to the Saudi government’s sweeping corruption investigation, according to two senior advisers to the Saudi government. Several prominent businessmen also were taken in by Saudi authorities in recent days.

It isn’t clear if those people are all accused of wrongdoing, or whether some of them have been called in as witnesses. But their detainment signals an intensifying high-stakes campaign spearheaded by Saudi Arabia’s 32-year-old crown prince, Mohammed bin Salman.

Saudi authorities launched a campaign of arrests on Nov. 4 that has swept up some of the kingdom’s wealthiest and most powerful people, including royals and cabinet ministers. Among them are billionaire Prince al-Waleed bin Talal, a top investor in companies including Twitter, Citigroup and Lyft, as well as Prince Miteb bin Abdullah, the former head of the National Guard, one of the kingdom’s three main security forces. Neither could be reached for comment.

The government says the crackdown, overseen by a new anticorruption agency led by Prince Mohammed, is aimed at sending a strong message that graft won’t be tolerated as the leadership accelerated economic reforms. The Saudi government says 201 people so far have been held without charges, but hasn’t officially named those people. Nearly 2,000 bank accounts have been frozen, according to three people who have been briefed on the matter.

Saudi authorities said all wealth they can prove was amassed through corruption would become state property. Authorities are pushing for plea bargains that would see the accused transfer the bulk of their wealth to the state.

The government initially hoped to recover as much as $800 billion it believed was accumulated illegally, much of it kept abroad. Now, authorities believe they can lay claim on assets worth around $300 billion to $400 billion that they can prove was linked to corruption, according to two people familiar with the matter.

“They have said it from day one that they want to reach some sort of settlement,” said a person close to the government. “It’s a question of how many cents on the dollar.”

He and a senior Saudi official said that authorities are pushing for some suspects to relinquish around 70% of the wealth the government believes they amassed illegally, but that discussions are still ongoing to determine the exact amounts. The Saudi official said that some of the people were likely to settle by handing over about half of their total wealth to the state. They said the government has rough estimates—based on information disclosed during the investigation—of each detainee’s net worth and of their alleged ill-gotten wealth.

A voluntary surrender of assets would remove the legal challenges of trying to seize them overseas. Many of those assets are held in jurisdictions that preclude easy access by foreign governments, according to a person familiar with the matter. Striking amnesty deals in exchange may ultimately put those assets within the government’s reach.

“They don’t want to put these people in jail,” said one of those people. “They want the money.”

Most of those detained are being held in Riyadh’s Ritz Carlton hotel, which is operating as a high-security five-star prison. The hotel is sealed from the outside, with few allowed in or out and use of phones prohibited, say people familiar with the investigation.

“No one can go in except for MBS and his closest advisers,” one person said, referring to Prince Mohammed.

The crackdown has won support domestically for taking on an elite class of people who amassed wealth in the oil-rich nation. It has been especially popular among younger Saudis who constitute the bulk of the population.

Such moves also have shattered Saudi Arabia’s traditional rule by consensus, and have showed how Prince Mohammed—nicknamed “Mr. Everything”—is wielding near total power over the country’s politics and economy.

The latest arrests could still mark only the initial stages of a wider clampdown, say people familiar with the matter. An adviser to Saudi Arabia’s King Salman suggested that more money could be handed over as the anticorruption campaign continues apace.

Mohammad Bin Salman Al Saud wearing a hat © Pavel Golovkin/Associated Press

“This is the first phase so that target would not be reached that easily or quickly,” he said.

A number of businessmen including Loai Nasser, Mansour al-Balawi, Zuhair Fayez and Abdulrahman Fakieh also were rounded up in recent days, the people said. Attempts to reach the businessmen or their associates were unsuccessful.

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