InternationalVOLUME 15 ISSUE # 09

Saudi Arabia’s fresh crackdown

Saudi Arabia has announced a fresh crackdown on corruption by launching investigations against 20 prominent personalities of the world, including former Pakistan Prime Minister Nawaz Sharif, Bangladesh Prime Minister Khaleda Zia and Lebanese Prime Minister Saad al-Hariri. Experts say the probe has the potential to shake the world, like the Panama Papers.

Though the probe is in the initial stage, yet it spells trouble for at least the three former prime ministers, because Saudi authorities would not have named them if they had not concrete evidence against them. It will worsen the situation for the Sharifs, who are already fighting for their political survival in Pakistan in the wake of a number of corruption charges against them. The Saudi probe will strengthen the cases against them in Pakistan. The same is case with Khaleda Zia.

Former Prime Minister Nawaz Sharif was serving a seven-year jail term when he was allowed to leave Pakistan for treatment abroad recently. He was handed down the sentence for his businesses in Saudi Arabia as the court found him guilty of corruption and corrupt practices last year. The court also fined him Rs1.5 billion and US $25 million in the case and disqualified him for 10 years from holding any public office. The former premier, however, was acquitted in the Flagship Investments reference. The reference pertains to the Sharifs being unable to justify the source of funds provided to set up Al-Azizia Steel Mills and Hill Metal Establishment (HME) in Saudi Arabia, making it a case of owning assets beyond means. The court had also ordered the federal government to forfeit all assets, properties, rights, receivables and interests and approach the government of Saudi Arabia to implement the forfeiture. The court ordered that perpetual non-bailable arrest warrants be issued for Nawaz’s sons, Hussain and Hassan, who had already been declared proclaimed offenders for absconding from the trial. Al-Azizia Steel Mills and Flagship Investments references concern the setting up of the Al-Azizia and Hill Metal Establishment in Saudi Arabia, and Flagship Investment in the United Kingdom. According to the Sharif family, the late Mian Mohammad Sharif, (Nawaz Sharif’s father) had provided AED 5.4m to Hussain Nawaz and AED 4.2m to Hasan Nawaz to establish Al-Azizia and Hill Metal Establishment in Saudi Arabia, and Flagship Investment and 16 other companies in the UK, when the family was in exile. On July 28, 2017, the Supreme Court had disqualified the then Prime Minister Nawaz from his position and directed the accountability authority to file three references in Avenfield Properties, Al-Azizia and Flagship Investment cases before the accountability court.

According to Saudi authorities, they are investigating the former prime ministers’ possible complicity in money-laundering, corruption and bribery. Khaleda Zia and her sons have an investment of around $12 billion in malls and other infrastructural projects in Saudi Arabia with money allegedly amassed through bribery and extortion.

The Saudi authorities have announced the launch of new investigations after they ended the biggest crackdown of the country’s history early this year, in which about $107 billion was recovered. An anti-corruption commission headed by Crown Prince Mohammed Bin Salman said the funds received from 87 individuals came in cash, real estate, companies and securities. The commission referred more than 60 people to prosecution, according to a royal court statement carried by state media. The purge, which started in November 2017, prompted a growing number of rich Saudis to try to move money out of the kingdom or draw up plans to leave, Bloomberg News reported in November.

Dozens of royal family members and business leaders were rounded up and detained at the Ritz Carlton hotel in Riyadh. The palatial hotel reopened for the public in February last year. The list of royals and businessmen who were jailed included Saudi billionaire Prince Alwaleed bin Talal, who was released after signing a “confirmed understanding,” and Saudi-Ethiopian billionaire Mohammed Al Amoudi, who was released in January. The commission said that 56 people who were referred to prosecution had “other criminal cases against them.” Eight other people “refused to settle despite the existence of evidence against them, and they were referred to the public prosecutor.”

Experts say Saudi Arabia is gearing up efforts to combat rampant corruption within its public institutions. As with several other Arab countries, bribery is rife in governmental sectors but the kingdom hasn’t been letting anyone guilty of such acts walk free. In a recent case that has been made public, the country’s public prosecution detained a prominent businessman who bribed a government employee with 75 million Saudi riyals ($20 million) in a bid to get approval on a billion-dollar project.

Saudi Arabia has become the first Arab country to be granted full membership of the Financial Action Task Force (FATF), the global money laundering watchdog, in June this year. Its full membership came after it was reported the kingdom had made “tangible progress” and for its efforts in implementing FATF guidelines. Analysts say it will be a huge development if the Saudi authorities move against the three former prime ministers, two of whom, Nawaz Sharif Saad al-Hariri, are considered close to the royal family. If the charges prove against them and action is taken, it will improve the image of the country in the comity of nations and further squeeze space for corruption and money laundering in the world. It will also benefit the countries from when ill-gotten money was generated and laundered.