Prince Al Waleed Bin Talal is not happy. He is mad at the Forbes magazine, for allegedly understating his personal fortune by more than $9bn, to a mere $20bn. This has made Prince Al Waleed only the 26th richest man in the world in the Forbes World’s Billionaire list published last week. He has severed the ties with the Forbes magazine. At the same time (to prove his point?) he has announced that he will push ahead with constructing the world’s tallest building, a 1km-tall skyscraper, above the Saudi city of Jeddah. The structure that should one day surpass Dubai’s 828m Burj Khalifa, has been delayed as contractors have to spend months driving piles deep into the earth of the notoriously flood-prone coastal city to support. Apparently, building the highest-rise tower in the world is not that difficult. All you need to do is to drill 100m deep foundations.
Prince Al Waleed is a member of the Saudi royal family, a grandson of Saudi Arabia's founder Ibn Saud and a nephew of the current King Abdullah. He is also the founder, CEO, and 95%-owner of the Kingdom Holding Company. Arabian press rank him as the most influential Arab in the world. Born in 1955, Prince Al Waleed was schooled at Riyadh military academy and graduated in business administration from California’s Menlo College in late 1970’s. He started his career by investing $600,000 from a mortgage against a house, gift from his father, in the Saudi’s booming 1980s construction industry. He went on investing in Saudi in a variety of sectors from petrochemicals to supermarkets but became globally known only in 1991 when he invested $590m in Citibank to bail out the American financial giant from troubles caused by underperforming American real estate loans and Latin American businesses. The Prince’s holdings in Citigroup currently comprise about $1 billion.
Other shareholdings include Apple, Procter & Gamble and, in a $300m investment announced in 2011, Twitter. The purchase gave Kingdom Holding a more than 3% share of the company which is valued at anywhere you want, really, but probably will IPO in late 2013 at well over $10bn, which is the valuation implied by the Prince’s investment. Another investment is Rupert Murdoch’s News Corp, in which Kingdom owns 7 per cent of voting shares, worth about $7bn. News Corp in return holds about 20 per cent of the prince’s Rotana media group, the Arab world's largest entertainment company. The Prince also made large investments in AOL, MCI Inc., Motorola, Fox News, and other technology and media companies. His real estate holdings have included large stakes in the Four Seasons hotel chain and the Plaza Hotel in New York, London's Savoy Hotel and Monaco's Monte Carlo Grand Hotel. He currently holds a 10% stake in Euro Disney SCA. In January 2006, in partnership with the U.S. real estate firm Colony Capital, Kingdom Holding acquired th premium-hotel management company Fairmont Hotels and Resorts for an estimated $3.9 billion.
Yet, in 1999, The Economist expressed doubts about the source of income of Prince Al Waleed and whether he is investing his own funds or merely fronting other Saudi investors. The Economist has calculated that Prince Al Waleed’s income, large as it was, was insufficient to cover his expenditures. While he is primarily a businessman, and not seen as candidate?for the throne, the Prince describes himself as “implicitly immersed” in politics, his commercial standing a “jumping board to branch out to other aspects of life and society”. He has met with UK Prime Minister David Cameron, allegedly sponsored US President Obama’s admission to Harvard some 20 years ago, and lists many other royals and heads of state he has met.
The Saudi government and the royal family have often, over many years, been accused of corruption. In a country that is said to "belong" to the royal family and which is named for them, the lines between state assets and the personal wealth of senior princes are blurred. The extent of corruption has even been described as systemic. In 2007, charges were raised against the British defence contractor BAE Systems for allegedly having paid Prince Bandar bin Sultan, another senior member of the royal family, $2 billion in bribes relating to the Al-Yamamah arms deal. While Prince Bandar denied the allegations, BAE Systems settled with the US and UK authorities in 2010 in plea bargain agreements under which it paid $447 million in fines but did not admit to bribery.
The ruling family of Saudi Arabia is the House of Saud. King Abdul-Aziz bin Saud, or Ibn Saud, became the leader of the House of Saud and founded the “modern” Saudi Arabia after capturing Riyadh from competing tribesmen in 1902. The new kingdom was one of the poorest countries in the world, reliant on limited agriculture and pilgrimage revenues. But King Ibn Saud was a smart man. He married and divorced many times (though he never had more than four wives at the time), marrying for political alliance into many of the noble clans and tribes within his territory and also arranged for his sons to enter into similar marriages. He fathered dozens of sons and daughters and distributed all government roles within the family. The Saudi family became known as the "royal family," and each member, male and female, was accorded the title amir or amira ("prince" or "princess"), respectively. There are currently around 7,000 of them and they completely control the country. No job of influence in Saudi Arabia is held outside of the family.
Ibn Saud’s last smart move (the king died in 1953), and a true masterstroke, was having cemented an alliance with the United States in 1945. In foreign policy, close ties with the US have been developed over the past several decades and especially in the wake of the Iranian Islamic revolution which highly concerned both the US policy makers and the rulers of the House of Saud. Saudi remains an important ally to the US and with that to the rest of the Western world. Words of criticism of the Saudi regime are seldom, if ever, heard in mainstream media. It doesn’t seem to matter at all that Saudi Arabia is an absolute monarchy, ruled by Islamic Sharia law and one of the most restrictive countries in the world, more oppressive to its opponents than the publicly wiled regimes in Iraq, Libya, Syria and most countries of the Maghreb and Middle East. When the US Presidents get photographed shaking hands with the Saudi royal princes, they probably don’t discuss the fact that the country is censored and controlled by the feared religious police of Mutaween whose torture and murder of political opponents is a common remedy to the Saudi problems of democracy. Or that there are no political parties in Saudi Arabia and no national elections. Or that under the Saudi criminal justice system, which assumes guilty-until-proven-innocent, death penalty can be imposed for offences including adultery, homosexual acts, witchcraft and sorcery (The last reported execution for sorcery in fact took place in June 2012.). Or that the severe punishments permitted include beheading, stoning, amputation and lashing as well as retaliatory punishments, or Qisas where for instance, an eye can be surgically removed at the insistence of a victim who lost his own eye.
The world's second largest oil reserves were discovered in the Al-Hasa region along the Saudi coast of the Persian Gulf in 1938 and full-scale development of the oil fields began in 1941 under the US-controlled Aramco (Arabian American Oil Company). Saudi Arabia gained full control over Aramco in 1980 but the US oil-driven businesses are still the largest foreign direct investors in Saudi Arabia by a wide margin. By 1976 Saudi had become the largest oil producer in the world and currently produces 10% of the world oil output. It also has the 6th largest natural gas reserves in the world.
Saudi Arabia also plays a prominent role in the International Monetary Fund and the World Bank, and in 2005 it joined the World Trade Organization. Between the mid-1970s and 2000 Saudi Arabia expended over $70 billion in "overseas development aid". However, there is strong evidence that the vast majority was actually spent on extending the influence of Wahhabism at the expense of other forms of Islam. There has been an intense debate over whether Saudi aid and Wahhabism has contributed to the rise of extremism in recipient countries as, by its nature, Wahhabism encourages intolerance and promotes terrorism. Relations with the United States became somewhat strained following 9/11 in which 15 of the 19 hijackers were from Saudi Arabia. Osama bin Laden, of course, is the country’s most famous son and scion of the immensely wealthy bin Laden family.
Prince Al Waleed announced that his company had contracted the Binladen Group to build the tallest building in the World, the Kingdom Tower, for a budgetted US$1.2bn. As one observer commented, it is not clear why a country which doesn’t have a working sewage system and which can claim only a 60% female literacy, needs the tallest building in the world. Prince Al Waleed disagrees, of course.