Saudi Arabia: Investment Fund Linked to Abuses

Human Rights Watch – (Beirut) – The United States should investigate and regulate sovereign wealth funds like Saudi Arabia’s Public Investment Fund (PIF) that have been linked to human rights abuses, Human Rights Watch said in testimony today before the US Senate Permanent Subcommittee on Investigations.

The hearing examined the fund’s substantial holdings in the United States. It followed the announced merger in June 2023 of the Professional Golfers’ Association (PGA) and LIV Golf, which is owned by the Saudi fund. Under Crown Prince Mohammed Bin Salman, the fund has facilitated and benefitted from human rights abuses. The crown prince is chairman of the US$700 billion fund, which is built on the state’s oil wealth.

“Mohammed Bin Salman has shown a clear interest in expanding his influence beyond Saudi’s borders often through high-profile business deals with sports teams and leagues,” said Joey Shea, Saudi Arabia researcher at Human Rights Watch. “US businesses considering a handshake with Saudi’s PIF should undertake extremely rigorous due diligence to ensure that sovereign wealth funds that invest in US companies are not furthering human rights abuses.”

Human Rights Watch has reported extensively on the Crown Prince’s consolidation of political and security power over the last few years in Saudi Arabia, and the dire implications for human rights. In tandem, MBS has consolidated economic power in the Kingdom notably via the PIF.

The fund has been directly involved in human rights abuses linked to the crown prince. They include the 2017 “anti-corruption” crackdown that involved arbitrary detentions, abusive treatment, and the extortion of property from former and current government officials, prominent businessmen, and rivals within the royal family, as well as the 2018 murder of the Saudi journalist Jamal Khashoggi.

This raises serious concerns for US businesses engaging with the PIF, and any possible links this may create between them and abuses in Saudi Arabia and abroad, particularly as the fund expands its investments in key sectors of the US economy, including technology, sports, entertainment, and finance. This should also be a concern for US regulators and Congress, Human Rights Watch said.

Some sovereign wealth funds are structurally separate and distinct from a government’s chief executive. But the crown prince wields significant control over the PIF, one of the largest such funds in the world, and exercises unilateral decision-making with little transparency or accountability over the fund’s decisions. While Saudi Arabia’s state finances have long been characterized by a lack of transparency and oversight, the restructuring and dramatic expansion of the fund has consolidated – to an unprecedented degree – vast economic power in Saudi Arabia under the Crown Prince alone.

Human Rights Watch wrote to the fund’s governor, Yasir al-Rumayyan, who, according to a LinkedIn page attributed to al-Rumayyan and various media reports, was managing director of the fund between 2015 and 2019, on December 21, 2021, and again on March 15, 2022, requesting his response to allegations of serious human rights violations associated with the fund. He has not responded.

As a result of the corruption crackdown, about 20 companies were captured as part of the crackdown and transferred directly into the fund at the crown prince’s instructions, according to documents in a Canadian lawsuit that Human Rights Watch reviewed. Some of those detained in 2017 remain in detention without charge, and others have not been heard from since.

There has been no transparency regarding the asset seizure process. Some of the assets seized during the crackdown appear, according to The Guardian, to have been transferred to a holding company that is wholly owned by the PIF, apparently on the orders of Mohammed bin Salman. Other assets were reportedly transferred to a different government-controlled holding company managed by the Ministry of Finance. It is not clear who ultimately took ownership of the other assets.

The documents also indicated that one of the companies transferred was Sky Prime Aviation, a charter jet company that owned the two planes used in 2018 by Saudi agents to travel to Istanbul, where they murdered Khashoggi. In February 2021, the CIA released a report assessing that Mohammed bin Salman had approved the operation.

Over the last several years, the Saudi government has embarked on a vast campaign to rehabilitate its image and deflect from the global perception of the Saudi state as a severe and persistent human rights violator, particularly under the de facto leadership of Crown Prince Mohammed bin Salman. The PIF, although an arm of the Saudi government and controlled by the country’s de facto leader, has sought to portray itself as an investor acting based on financial interests, rather than at the direction of the Crown Prince.

Saudi Arabia has hosted or sponsored events that celebrate human achievement, like major sporting events in the effort to improve its image. The fund is a central component of the country’s Vision 2030, which explicitly laid out the role of sports in enhancing the image of Saudi Arabia abroad.

On June 6, the PGA Tour announced an agreement combining the fund’s golf-related commercial businesses and rights, including LIV Golf, with the PGA Tour and DP World Tour into “a new, collectively owned, for-profit entity.” Unlike the sponsorship of an event or ownership of a team, control over an entire sector of professional sports raises the possibility of pressuring players, sponsors, and media to stay silent on Saudi Arabia’s abuses, and raises concerns about what measures will be taken within the league to undermine human rights.

Human Rights Watch wrote to the PGA Tour’s Policy Board on June 22 detailing concerns about the implications of the fund effectively obtaining a monopoly over professional golf while it is also complicit in human rights abuses. As of September 13, Human Rights Watch had not received a response, nor are there indications that the tour has sought to develop a human rights strategy.

“It’s important that the US Congress is looking into the influence of the Saudi fund into US business,” Shea said. “The Biden administration should be taking similar cautions in its further engagement with the Saudi government, given its rights record and how it is using its billions to launder its image.”