Saudi Arabia: Leaked cable reveals how royals get rich
A secret cable sent from the US Embassy in Riyadh, Saudi Arabia, in 1996, released by WikiLeaks, provides an in-depth account of the processes of wealth distribution and waste within the ruling House of Saud.
The cable noted: “Royals still seem more adept at squandering than accumulating wealth.” It said corruption abounded largely unchecked.
It was the view of the US embassy in Saudi Arabia that getting a grip on royal family excess was at the top of pressing concerns for the oil-rich US ally.
The cable examined how the Saudi royals that run the Islamic fundamentalist kingdom obtain their money. These mechanisms provide the “seed money for royals to launch local and international business ventures”.
The most common method for distribution of the nation’s wealth to members of the royal family is the formal, budgeted system of monthly stipends for all members of the Al Saud.
This process is managed by the finance ministry's Office of Decisions and Rules. The stipends range from US$270,000 a month for the more prominent members of the royal family, to $800 dollars a month for the “lowliest member of the most remote branch of the family”.
Bonus payments are also allocated for marriage and palace building.
The US embassy estimated the stipends system put an annual drain of about $2 billion on the $40 billion government budget.
Apart from the stipends system, a small group of the most senior princes enrich themselves by controlling several billion dollars in annual expenditures in “off-budget” programs.
Due to the lack of finance ministry oversight and controls, these programs are widely viewed as sources of royal rake-offs.
Through these off-budget programs, five or six princes control the revenue from 1 million barrels of crude oil production a day out of the nation's total production of 8 million barrels a day.
Another method by which some Saudi princes obtain money is by borrowing from the banks and not paying them back with the possible exception of National Commercial Bank (NCB), which has always been viewed as the royal family's bank.
“Saudi banks generally turn royals away unless they have a proven repayment track record,” the cable noted.
The cable revealed Saudi princes use their power and authority to confiscate land from commoners, “especially if it is a site for an upcoming project and can be quickly resold to the government for a profit”.
Another common method employed by the princes is for them, as individuals, to sponsor sometimes hundreds of expatriate workers to freelance on the local economy and in return pay their royal sponsor a monthly fee usually about $100.
The US embassy estimated, at the time of the cable, that the wealthiest royals were: Al-Walid bin Tatat bin Abd Al-Aziz ($13 billion); King Fahd ($10 billion); defense minister Prince Sultan bin Abd Al-Aziz ($10 billion); and Khalid bin Sultan Abd Al-Aziz ($2 billion).
Saudi royalty is expected to have wealth and the “trappings”
of power. Prominent royal family members hold Majlises characteristic or symbolic signs of power. The Majlises are where visitors can discuss their concerns and seek royal intercession with the authorities.
The cable said Crown Prince Abdullah’s weekly Majlises brought dozens and even hundreds of petitioners, most of whom receive some monetary or other form of assistance for their problem.
Former Eastern Province governor Fahd bin Selman claimed he spent about $4 million, all of which came from his own pocket, on feasts and largesse for commoners during the Muslim holy month of Ramadan.
The US embassy made it clear that it views there is a large difference between appropriate royal largesse and greed; and that many believe that this royal greed has gone beyond the bounds of reason.
One example of this is the widespread intrusion on the business community's turf which has been traditionally off-limits to Saudi royals.
“As long as the royal family views (Saudi Arabia) and its oil wealth as Al Saud Inc., the thousand of princes and princesses will see it as their birthright to receive dividend payments and raid the till.”
The cable said the Office of Decisions and Rules “appears to fulfil three main functions”: Distribution of stipends to the royal family; distribution of stipends to other families and individuals granted monthly stipends in perpetuity; and fulfilment of financial promises made by senior princes to commoners.
Land and asset grabs by Al Saud are understandably said to cause resentment among commoners.
One example of this was when defence minister Prince Sultan bin Abd Al-Aziz purportedly ordered Mecca officials to transfer him a section of land that had belonged to one family for centuries.
Royals are also said to commonly seize the assets of profitable businesses the cable explained that for this reason, many Saudi businesspeople invest their money outside the country.
The cable said the most prominent manifestation of royal family corruption consists of skimming from the billions in off-budget spending controlled by the inner circle of Saudi royalty.
The cable said many in Saudi Arabia feel that royal greed has run rampant, that it “has gone beyond the bounds of reason”.
Although the US embassy cable clearly describes, in private, the rampant corruption that abounds in the Al Saud, the US has no qualms about the close alliance it enjoys with the ruling family.
The US Department of State website says: “Saudi Arabia's unique role in the Arab and Islamic worlds, its possession of the world's largest reserves of oil, and its strategic location make its friendship important to the United States.”
Not even the events of September 11, 2001 were strong enough to break down the strength of US-Saudi Arabia relations, despite most of the hijackers involved in the attacks originating from Saudi Arabia.
The site says: “Although Saudi Arabia's relations with the United States were strained after September 11, 2001, Saudi Arabia is now one of the United States' strongest partners against terrorism.”
The close ties with Saudi Arabia, which brutally suppresses democratic rights, further highlights the US government's hypocritical claims to support democracy around the world.
Saudi Arabia, backed by the US, is well known for its role in destroying the pro-democracy movement in Bahrain. The first round of the Bahraini uprising, which occurred as part of the Arab Spring revolutions this year, was brought to a swift and brutal end on March 14, when Saudi and UAE troops entered the country under the pretext of protecting essential facilities.
The Saudi forces began a violent crackdown on the unrest, using imprisonment, torture, night raids and death as their main devices.
Saudi Arabia has been intensely criticised for its human rights abuses. Amnesty International has condemned the criminal justice system and its severe punishments.
Saudi courts still impose punishments such as stoning, amputation, beheading and lashing. Yet the US uses these types of human rights abuses as its rationale for invading Afghanistan to remove the Taliban a hypocritical claim that justified starting a war now 10 years old and with no end in sight to the slaughter and devastation.