Saudi Arabia’s surprise crackdown, which led to the arrests of princes, billionaires and officials over the weekend, is expanding beyond those previously detained in what authorities described as an anti-corruption drive.
The central bank ordered banks in the kingdom to freeze the accounts of dozens of individuals who aren’t under arrest, according to three people with knowledge of the matter. Already, as much as $33 billion in personal wealth belonging to the richest detainees has been put at risk.
More may be on the way: The Saudi Arabian Monetary Authority sent a list of hundreds of names to lenders, telling them to freeze any accounts linked to them, two of the people said. They asked not to be identified because the information is private. No reason has been given for the actions and central bank officials didn’t immediately respond to a request seeking comment.
The weekend arrests of princes, officials and billionaires, included Prince Alwaleed bin Talal, one of the world’s richest men and a shareholder in such global companies as Citigroup Inc. and Apple Inc., reverberated across board rooms and financial institutions in the biggest Arab economy and globally. Saudi stocks fell.
The move drew support from President Donald Trump but also raised concern among analysts that a power grab was underway. In all, 11 princes, four ministers and dozens of former ministers and well-known businessmen were taken into custody, according to Saudi media and a senior official who spoke on condition of anonymity.
The arrests were under the auspices of an anti-corruption commission that King Salman set up on Saturday, headed by his son and heir, Prince Mohammed bin Salman. The king also dismissed Prince Miteb bin Abdullah from his post as head of the powerful National Guard, taking out one of the last princes who had survived a series of cabinet reshuffles promoting allies of the crown prince.
The detentions ordered by King Salman reinforced speculation that he was clearing any remaining obstacles to his son’s accession to the throne. But they were also lauded by many Saudis bearing the brunt of low oil prices who have long complained that the kingdom’s elite was above the law.
The Saudi attorney general said in a statement released Monday that weekend arrests of princes, businessmen and officials were only “phase one” of the anti-corruption drive.
The benchmark Tadawul All Share Index fell as much as 3.1 percent on Monday before trimming losses to trade 0.7 percent lower at 3:25 p.m. in Riyadh. Prince Alwaleed’s Kingdom Holding plummeted 10 percent, it’s down 21 percent since the arrests.
Riyal forward contracts that expire in 12 months rose to 260 points on the offshore market, the highest level since July.
“It’s almost the equivalent of arresting Bill Gates to have Prince Alwaleed bin Talal under arrest,” Robert Jordan, former U.S. ambassador to Saudi Arabia, told Bloomberg TV on Monday. A genuine push against corruption would add to the credibility of Prince Mohammed’s push to prepare the economy for the post-oil era, including selling a stake in Saudi Aramco and bolstering non-oil revenue, he said.
“If it turns out to simply be a power grab, then I think it’s going to hurt the Saudis in the long run, and certainly hurt this crown prince,” Jordan said.
The crackdown has coincided with an escalation in tensions between Saudi Arabia and Shiite-ruled Iran, its chief regional rival.
Pro-Iranian Yemeni rebels fired a ballistic missile on Saturday that targeted Riyadh’s international airport for the first time, a move Saudi officials said could amount to an “act of war” by the Islamic Republic. Iranian officials denied any involvement. Earlier that day, Lebanese Prime Minister Saad al-Hariri unexpectedly resigned in a speech from Riyadh, blaming Iran for destabilizing his country.
“Investors have been hammered with bad news on the geopolitical front,” said Nabil Al Rantisi, the managing director of Abu Dhabi-based Mena Corp. Financial Services. “It’s not easy to see what is coming next.”
Saudi Arabia has welcomed Trump’s hardline policy against Iran, which he has described as a “rogue state.” Trump also gave his backing to the royal roundup in a tweet Tuesday morning from Japan.
“I have great confidence in King Salman and the Crown Prince of Saudi Arabia, they know exactly what they are doing,” the president said.
A senior Saudi official denied the crackdown had any other purpose than to fight corruption. The accused “will be subject to investigation according to the regular procedures adopted in the Kingdom,” he said.
According to the official, the charges against Prince Alwaleed include money laundering, bribery and extortion of some officials. Prince Miteb is charged with embezzlement, fraudulent employment and the awarding of projects to his own companies. Another royal family member, Prince Turki bin Abdullah, is accused of corruption related to massive train project, using his influence to win projects for companies affiliated to himself, the official said.