Real Motive Behind Saudi Purge Emerges: $800 Billion In Confiscated Assets

Tyler Durden's picture

From the very beginning, there was something off about Sunday's unprecedented countercoup purge unleashed by Mohammad bin Salman on alleged political enemies, including some of Saudi Arabia's richest and most powerful royals and government officials: it was just too brazen to be a simple "power consolidation" move; in fact most commentators were shocked by the sheer audacity, with one question outstanding: why take such a huge gamble? After all, there was little chatter of an imminent coup threat against either the senile Saudi King or the crown prince, MbS, and a crackdown of such proportions would only boost animosity against the current ruling royals further.

Things gradually started to make sense when it emerged that some $33 billion in oligarch net worth was "at risk" among just the 4 wealthiest arrested Saudis, which included the media-friendly prince Alwaleed.

One day later, a Reuters source reported that in a just as dramatic expansion of the original crackdown, bank accounts of over 1,200 individuals had been frozen, a number which was growing by the minute. Commenting on this land cashgrab, we rhetorically asked "So when could the confiscatory process end? As we jokingly suggested yesterday, the ruling Saudi royal family has realized that not only can it crush any potential dissent by arresting dozens of potential coup-plotters, it can also replenish the country's foreign reserves, which in the past 3 years have declined by over $250 billion, by confiscating some or all of their generous wealth, which is in the tens if not hundreds of billions. If MbS continues going down the list, he just may recoup a substantial enough amount to what it makes a difference on the sovereign account."

Then an article overnight from the WSJ confirmed that fundamentally, the purge may be nothing more than a forced extortion scheme, as the Saudi government - already suffering from soaring budget deficits, sliding oil revenues and plunging reserves - was "aiming to confiscate cash and other assets worth as much as $800 billion in its broadening crackdown on alleged corruption among the kingdom’s elite."

As we reported yesterday, the WSJ writes that the country’s central bank, the Saudi Arabian Monetary Authority, said late Tuesday that it has frozen the bank accounts of “persons of interest” and said the move is “in response to the Attorney General’s request pending the legal cases against them.” But what is more notable, is that while we first suggested - jokingly - on Monday that the ulterior Saudi motive would be to simply "nationalize" the net worth of some of Saudi Arabia's wealthiest individuals, now the WSJ confirms that this is precisely the case, and what's more notably is that the amount in question is absolutely staggering: nearly 2x Saudi Arabia's total foreign reserves!

As the WSJ alleges, "the crackdown could also help replenish state coffers. The government has said that assets accumulated through corruption will become state property, and people familiar with the matter say the government estimates the value of assets it can reclaim at up to 3 trillion Saudi riyal, or $800 billion."

While much of that money remains abroad - and invested in various assets from bonds to stocks to precious metals and real estate - which will complicate efforts to reclaim it, even a portion of that amount would help shore up Saudi Arabia’s finances.

A prolonged period of low oil prices forced the government to borrow money on the international bond market and to draw extensively from the country’s foreign reserves, which dropped from $730 billion at their peak in 2014 to $487.6 billion in August, the latest available government data.

Confirming our speculation was advisory firm Eurasia Group, which in a note said that the crown prince "needs cash to fund the government’s investment plans" adding that “It was becoming increasingly clear that additional revenue is needed to improve the economy’s performance. The government will also strike deals with businessmen and royals to avoid arrest, but only as part of a greater commitment to the local economy.”

Of course, there is a major danger that such a draconian cash grab would result in a violent blowback by everyone who has funds parked in the Kingdom. To assuage fears, Saudi Arabia’s minister of commerce, Majid al Qasabi, on Tuesday sought to reassure the private sector that the corruption investigation wouldn’t interfere with normal business operations. The procedures and investigations undertaken by the anticorruption agency won’t affect ongoing business or projects, he said. Furthermore, the Saudi central bank said that individual accounts had been frozen, not corporate accounts. “It is business as usual for both banks and corporates,” the central bank said.

However, this is problematic: first, not only is the list of names of detained and "frozen" accounts growing by the day...

The government earlier this week vowed that it would arrest more people as part of the corruption investigation, which began around three years ago. As a precautionary measure, authorities have banned a large number of people from traveling outside the country, among them hundreds of royals and people connected to those arrested, according to people familiar with the matter. The government hasn’t officially named the people who were detained.

... but the mere shock of a move that would be more appropriate for the 1950s USSR has prompted crushed any faith and confidence the international community may have had in Saudi governance and business practices.

The biggest irony would be if from this flagrant attmept to shore up the Kingdom's deteriorating finances, a domestic and international bank run emerged, with locals and foreign individuals and companies quietly, or not so quietly, pulling their assets and capital from confiscation ground zero, in the process precipitating the very economic collapse that the move was meant to avoid.

Judging by the market reaction, which has sent Riyal forward tumbling on rising bets of either a recession, or devaluation, or both, this unorthodox attempt to inject up to $800 billion in assets into the struggling local economy, could soon backfire spectacularly.

Meanwhile, for those still confused about the current political scene in Saudi Arabia, here is an infographic courtesy of the WSJ which explains "Who Has Been Promoted, Who Has Been Detained in Saudi Arabia"

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Bes's picture

saudi

shakedown

Five Star's picture

Saudi Arabia has the biggest budget deficit (relative to GDP) in the G20

http://thesoundingline.com/chart-day-two-g20-members-run-budget-surplus/

 

MagicHandPuppet's picture

Oh goodie.  The semite infighting over their ill-gotten booty will surely entertain us for at least a few more days until the long-game clearly reveals itself.

YUNOSELL's picture

$800 billion confiscated sure, but how many more $ billions gained from the instability created sending oil price per barrel up

 

Win-win for the prince

E.F. Mutton's picture

The problem with Theocratic Monarchies is that sooner or later you run out of rich princes to kill.

techpriest's picture

Yep, this is the final phase of a dying empire: seizing whatever is out there as a last attempt to keep everything together.

Chinese are doing this also, American politicians are doing it to the middle class and retirees. We're going to live in a time that people will be talking about a millenium from now.

BaBaBouy's picture

WHY Don't they have a Queen ? ? ? ? ? ? ?

BaBaBouy's picture

all Waleed should got his RICH A$$ Outta There while he had the Chance ...

Stuck on Zero's picture

Sales of gold plated Lamborghinis, mega-yachts, private submarines, $200M penthouses, and ski resorts are going to suffer.

macholatte's picture

 

We Will Never Forget?
Remember that slogan?
How quickly we forget.

Giuliani Refuses Saudi's Check
http://articles.latimes.com/2001/oct/12/news/mn-56406

BuddyEffed's picture

Saudi version of un-civil asset forfeiture

loebster's picture

Awaiting the USG to do the same to THOSE who control the Fed and their US associates. https://goo.gl/bFYusM

Pinto Currency's picture

The House of Saud has looted $10s of Trillions by skimming oil revenues since the beginning.

Seizing $800B is a limited hang-out. 

Note that the House of Saud still remains in power.

God Emperor's picture

Iran should just start bombing the crowned prince and help some of the "discarded" to do a coup.

Keeping Saudis in a civil war and making them kill eachother.

Best strategy to destroy Saudi Arabia and end joo influence in the area.

Pinto Currency's picture

At current oil production rate, House of Saud is skimming $30B of oil revenues per year or 20% of total oil revenue.

Not a good idea during the age of the internet.

Crisismode's picture

$30Billion is chump change these days.

They are skimming a helluva lot more than that.

 

WordSmith2013's picture

You have to know the back story to make sense of what's going on today.

 

http://themillenniumreport.com/2017/11/the-house-of-saud-its-jewish-orig...

 

The House Of Saud: It’s Jewish Origin And Installation By The British Crown (Updated)
Wile-E-Coyote's picture

This is just like raiding the piggy bank, these guys have assets stashed all over the world, for a start they own half of London.

guru69's picture

What the fuck is wrong with you?  I could say your wife is a whore and you would link your reply to the biblical institute, where it would be blamed on the Jews.  Get it into your peanut sized brain:  the Jews have nothing to do with it.  Go get a life (or a brain), you racist piece of shit.

Conscious Reviver's picture

Said the Jew. Dindu nuffin, said the Jew.

People don't like the tiny URL he keeps using,  not the content.

"Breaking News of Saudi Crown Prince's "Secret" Visit To Israel Brings Embassy Scramble"

http://www.zerohedge.com/news/2017-09-11/breaking-news-saudi-crown-princ...

 

Lucretius's picture

Whilst I agree in general, nonstop spamming jerk off of many names (loebster), there is, I believe, some truth in his message. Just food for thought, (((they))) are grossly over represented in the upper echelons of power...

 Welcome newbie.

shining one's picture

Hi dumb ass. Why don't you do some home work before letting your two brain cells have at it. Jews are NOT a race, hence critisism of them is NOT racist. Jews are a GROUP who follow Judaism. Others can NOT JOIN a race, they can however join a group ie Elisabeth Talor.

JethroBodien's picture

What's 800 billion among friends?

Pinto Currency's picture

The House of Saud has looted $10s of Trillions by skimming oil revenues since the beginning.

Seizing $800B is a limited hang-out. 

Note that the House of Saud still remains in power.

 

beemasters's picture

If the Saudis can do it, ANYONE can do it. Coming to a town near ye, Billionaires.

WTFRLY's picture

The cryptojoos are joo-ing hard

Joe Davola's picture

Fredo shouldn't have crossed Michael.

Delving Eye's picture

It's a sheikdown.

A billion here, a billion there ... pretty soon, you're talking real riyals ... royal rials!

svayambhu108's picture

All those money feeded a lot lifestyles down the line, a lot of people will be angry.  

BennyBoy's picture

 

This is what dumass mafiosa types do to each other. Its like watching the overated crime film The Godfather.

The main point is Trump and the current crime puppet running the sand pit called arabia is to protect the oil backed currency called the US dollar.

Why do you think Qatar became SA enemy a few months ago? Qatar Gas contracts being settled in Yuan.

The US dollar is backed by oil and murder, ask Saddam and Kadify and Assad.

Next up: time to demonize Lebanon once more. Theres pipelines to be built wherever the fuck big oil wants one.  And offshore gas fields to be seized by Israel.

Invinciblehandaxe's picture

could not happen to a nicer bunch of thieves

all joos are of the same devil

Bunghole's picture

WHY Don't they have a Queen ? ? ? ? ? ? ?

They do.  She's a pretty little sheep with long eyelashes.

cheka's picture

real reason?  ha ha.  what did they do to piss off skype?

AnonymousCitizen's picture

Well, it would be awkward to have 177 queens.

That and they have no respect for women.

mrtoad's picture

Cause the king had 42 of them.

hairball48's picture

"WHY Don't they have a Queen ? ? ? ? ? ? ?"

Good question. Those royal "prince" guys got plenty of those skinny lil "butt boys" stashed all over the world.

:)

813kml's picture

I posted this link in a previous thread but it bears repeating.  There was a lot of Saudi money "donated" to Shrillary's foundation and other campaigns in order to influence US politics.  This guy theorizes that Trump made a sweet deal to turn off the spigot, a win/win for both sides:

https://twitter.com/Imperator_Rex3/status/926939400990113792

BandGap's picture

Funny how Trump knows what string to pull to unravel the whole mess. He pulls and the people involved feel empowered to start working.

The biggest victory in the last election is the lifting of the fear about speaking up about things.

Open the window and let the light in.

Delving Eye's picture

I continue to be grateful that Hillzebub is not President. Her installation to that seat of power would have made permanent the Gordian knot of corruption that Trump is slowly undoing, thread by nasty thread. MAGA

Thought Processor's picture

 

 

Question is- what is the objective?  Simple power grab? Are they cleaning house?  Are the intel factions simply cutting out off 'exposed' players?

 

Everyone is wondering the same thing- what the fuck is really going on over there?  It's all speculation.

Wile-E-Coyote's picture

The simple answer is they are running out of cash, they probably asked nicely for contributions but...................

Richard III's picture

Does Bin Talal look like Father Guido Sarducci or what ?