Future Saudi king tightens grip on power with arrests including Prince Alwaleed

Future Saudi king tightens grip on power with arrests including Prince Alwaleed Stephen Kalin, Katie Paul RIYADH (Reuters) - Saudi Arabia’s future king has tightened his grip on power through an anti-corruption purge by arresting royals, ministers and investors including billionaire Alwaleed bin Talal who is one of the kingdom’s most prominent businessmen. Prince Alwaleed, a nephew of the king and owner of investment firm Kingdom Holding 4280.SE, invests in firms such as Citigroup (C.N) and Twitter (TWTR.N). He was among 11 princes, four ministers and tens of former ministers detained, three senior officials told Reuters on Sunday. The purge against the kingdom’s political and business elite also targeted the head of the National Guard Prince Miteb bin Abdullah, who was detained and replaced as minister of the powerful National Guard by Prince Khaled bin Ayyaf. The allegations against Prince Alwaleed include money laundering, bribery and extorting officials, one official told Reuters, while Prince Miteb is accused of embezzlement, hiring ghost employees and awarding contracts to his own companies including a $10 billion deal for walkie talkies and bulletproof military gear worth billions of Saudi riyals. Sponsored News of the purge came soon after King Salman decreed late on Saturday the creation of an anti-corruption committee chaired by Crown Prince Mohammed bin Salman, his 32-year-old favorite son who has amassed power since rising from obscurity three years ago. The new body was given broad powers to investigate cases, issue arrest warrants and travel restrictions, and seize assets. “The homeland will not exist unless corruption is uprooted and the corrupt are held accountable,” the royal decree said. Analysts said the arrests were another pre-emptive measure by the crown prince to remove powerful figures as he exerts control over the world’s leading oil exporter. The roundup recalls the palace coup in June through which he ousted his elder cousin, Mohammed bin Nayef, as heir to the throne and interior minister. MbS, as he is known, was expected to follow at least by removing Prince Miteb from leadership of the National Guard, a pivotal power base rooted in the kingdom’s tribes. Over the past year, MbS has become the ultimate decision-maker for the kingdom’s military, foreign, economic and social policies, causing resentment among parts of the Al Saud dynasty frustrated by his meteoric rise. Saudi Arabia’s stock index .TASI was dragged down briefly but recovered to close higher as some investors bet the crackdown could bolster reforms in the long run. The royal decree said the arrests were in response to “exploitation by some of the weak souls who have put their own interests above the public interest, in order to, illicitly, accrue money.” REFORM AGENDA The line between public funds and royal money is not always clear in Saudi Arabia, an absolute monarchy ruled by an Islamic system in which most law is not systematically codified and no elected parliament exists. WikiLeaks cables have detailed the huge monthly stipends that every Saudi royal receives as well as various money-making schemes some have used to finance lavish lifestyles. Analysts said the purge aimed to go beyond corruption and aimed to remove potential opposition to Prince Mohammed’s ambitious reform agenda, which is widely popular with Saudi Arabia’s burgeoning youth population but faces resistance from some of the old guard more comfortable with the kingdom’s traditions of incremental change and rule by consensus. In September, the king announced that a ban on women driving would be lifted, while Prince Mohammed is trying to break decades of conservative tradition by promoting public entertainment and visits by foreign tourists. The crown prince has also slashed state spending in some areas and plans a big sale of state assets, including floating part of state oil giant Saudi Aramco [IPO-ARMO.SE] on international markets. FILE PHOTO - Saudi Crown Prince Mohammed bin Salman attends the Future Investment Initiative conference in Riyadh, Saudi Arabia October 24, 2017. REUTERS/Hamad I Mohammed Prince Mohammed has also led Saudi Arabia into a two-year-old war in Yemen, where the government says it is fighting Iran-aligned militants, and a row with neighboring Qatar, which it accuses of backing terrorists, a charge Doha denies. Detractors of the crown prince say both moves are dangerous adventurism. The most recent crackdown breaks with the tradition of consensus within the ruling family, wrote James Dorsey, a senior fellow at Singapore’s S. Rajaratnam School of International Studies. “Prince Mohammed, rather than forging alliances, is extending his iron grip to the ruling family, the military, and the National Guard to counter what appears to be more widespread opposition within the family as well as the military to his reforms and the Yemen war,” he said. Scholar Joseph Kechichian said the interests of the Al Saud, however, would remain protected. “Both King Salman and heir apparent Mohammed bin Salman are fully committed to them. What they wish to instill, and seem determined to execute, is to modernize the ruling establishment, not just for the 2030 horizon but beyond it too,” he said. Many ordinary Saudis praised the crackdown as long-awaited. OPULENT HOTEL Slideshow (6 Images) A Saudi official said former Riyadh Governor Prince Turki bin Abdullah was detained on accusations of corruption in the Riyadh Metro project and taking advantage of his influence to award contracts to his own companies. Former Finance Minister Ibrahim al-Assaf, a board member of national oil giant Saudi Aramco, was also detained, accused of embezzlement related to the expansion of Mecca’s Grand Mosque and taking advantage of his position and inside information to purchase lands, the official added. Other detainees include ousted Economy Minister Adel Fakieh, who once played a major role in drafting MbS’ reforms, and Khalid al-Tuwaijiri, who headed the Royal Court under the late King Abdullah. People on Twitter applauded the arrests of certain ministers, with some comparing them to “the night of the long knives”, a violent purge of political leaders in Nazi Germany in 1934. Bakr bin Laden, chairman of the big Saudi Binladin construction group, and Alwaleed al-Ibrahim, owner of the MBC television network, were also detained. At least some of the detainees were held at the opulent Ritz-Carlton hotel in the diplomatic quarter of Riyadh, said sources in contact with the government and guests whose plans had been disrupted The hotel’s exterior gate was shuttered on Sunday morning and guards turned away a Reuters reporter, saying it had been closed for security reasons, although private cars and ambulances were seen entering through a rear entrance. The hotel and an adjacent facility were the site of an international conference promoting Saudi Arabia as an investment destination just 10 days ago attended by at least one of those now being held for questioning. The detentions follow a crackdown in September on political opponents of Saudi Arabia’s rulers that saw some 30 clerics, intellectuals and activists detained. Prince Alwaleed, a flamboyant character, has sometimes used his prominence as an investor to aim barbs at the kingdom’s rulers. In December 2015, he called then-U.S. presidential candidate Donald Trump a “disgrace to all America” and demanded on Twitter that he withdraw from the election. Trump responded by tweeting: “Dopey Prince @Alwaleed_Talal wants to control our U.S. politicians with daddy’s money. Can’t do it when I get elected.” His father, Prince Talal, is considered one of the most vocal supporters of reform in the ruling Al Saud family, having pressed for a constitutional monarchy decades ago. Additional reporting by Reem Shamseddine in Khobar and Rania El Gamal and Tom Arnold and Sylvia Westall in Dubai; Editing by Edmund Blair and Peter Cooney ========================= GLOBAL MARKETS-Asia shares stumble from decade highs, oil hits 2-year top on Saudi purge SYDNEY (Reuters) - Asian shares stepped away from recent decade highs on Monday while the U.S. dollar staged a broad-based rally and oil jumped to a more than two-year peak as Saudi Arabia’s crown prince cemented his power through an anti-corruption crackdown. FILE PHOTO: An investor looks at an electronic screen at a brokerage house in Hangzhou, Zhejiang province, January 26, 2016. REUTERS/China Daily Oil prices hit their highest since July 2015 as Mohammed bin Salman’s purge led to arrests of royals, ministers and investors including prominent business billionaire Alwaleed bin Talal. [O/R] The dollar climbed against the yen to an eight-month peak after a string of U.S. data bolstered views the Federal Reserve will hike interest rates next month and tighten further in 2018. JPY= Near-term sentiment will be directed by news related to U.S. President Donald Trump’s Asian tour this week. In his second day in Japan, Trump ramped up his tough rhetoric against North Korea, saying the United States and its allies are prepared to defend freedom. The U.S. President wants a united front with the leaders of Japan and South Korea before he visits Beijing to make the case to Chinese President Xi Jinping that more needs to be done to rein in Pyongyang. Trump also plans to meet Russian counterpart Vladimir Putin during his 12-day trip. With traders on edge about the outcome of these high-stake meetings, MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS slipped 0.7 percent to 552.8 from Friday’s top of 557.9 which was the highest since Nov. 2007. South Korea's KOSPI .KS11 fell 0.5 percent. Australian shares were off 0.1 percent but stayed within striking distance of a more than two-year peak set on Friday. Hong Kong's Hang Seng Index .HSI skidded 1 percent. Japan's Nikkei .N225 was a tad softer too but hovered around a 21-year peak. The losses in Asian shares came despite gains in Wall Street on Friday, with the Dow Jones Industrial Average .DJI up 0.1 percent, the S&P 500 .SPX gaining 0.31 percent and the Nasdaq .IXIC adding 0.74 percent. Investors now awaited progress on U.S. tax reforms which, if passed in its current form, will add $1.5 trillion to the U.S. budget deficit over the next ten years, said Elias Haddad, currency strategist at Commonwealth Bank. “While this pro-growth tax package is dollar supportive, it is still unclear if the package will have enough Republican support to pass through Congress by year-end or Q1 2018,” Haddad added. But for now, sentiment towards the greenback was still positive with leveraged funds paring bearish bets to be net long for the first time since late July. Dollar buying was broad-based against all the major currencies. [IMM/FX] Strong economic data has helped boost the outlook for the greenback. U.S. non-manufacturing purchasing managers’ index rose to its highest since 2005, figures out on Friday showed. New orders for U.S.-made goods gained for the second straight month in September and orders for core capital goods surpassed expectations. The dollar index .DXY held near four-month highs against a basket of currencies, while the euro EUR= trod water to loiter around its lowest since July. In energy markets, Brent futures LCOc1 were up 23 cents at $62.30 a barrel, the highest since July 2015. U.S. crude CLc1 added 17 cents to 55.81. Bin Salman’s reforms include a plan to list parts of giant state-owned oil company Saudi Aramco next year, and a higher oil price is seen as beneficial for the market capitalization of the future listed company. Spot gold XAU= was a touch soft at $1,268.34 an ounce. ===================== Oil hits two-year high on Saudi purge, world shares retreat Ritvik Carvalho 5 Min Read LONDON (Reuters) - Oil jumped to its highest in over two years on Monday as Saudi Arabia’s crown prince cemented his power through a crackdown on corruption, while world shares eased a notch and major currencies traded in tight ranges. FILE PHOTO: An investor looks at an electronic screen at a brokerage house in Hangzhou, Zhejiang province, January 26, 2016. REUTERS/China Daily Oil prices reached their highest since July 2015 as Mohammed bin Salman’s purge led to arrests of royals, ministers and investors including prominent billionaire investor Alwaleed bin Talal. [O/R] The news stirred concerns of Middle Eastern money pulling out of global financial markets. A weekend call by China’s central bank governor for tougher financial regulation also hit investor sentiment. Brent futures LCOc1 were up 32 cents at $62.39 a barrel, the highest since July 2015. U.S. crude CLc1 added 20 cents to 55.91, both up half a percent. The MSCI world equity index, which tracks shares in 47 countries was 0.1 percent lower. .MIWO00000PUS European shares fell in early deals following weaker trading in Asia and earnings disappointments weighed. The pan-European STOXX 600 was 0.1 percent lower by 0843 GMT. For Reuters Live Markets blog on European and UK stock markets see reuters://realtime/verb=Open/url=http://emea1.apps.cp.extranet.thomsonreuters.biz/cms/?pageId=livemarkets Shares in French hotel group Accor (ACCP.PA) fell 1.7 percent at the open, the biggest of the CAC 40 fallers, after its third biggest shareholder Prince Alwaleed bin Talal was arrested in the Saudi Arabian crackdown. Prince Alwaleed, a nephew of the king and owner of investment firm Kingdom Holding 4280.SE, invests in firms such as Citigroup (C.N) and Twitter (TWTR.N). He was among 11 princes, four ministers and tens of former ministers detained, three senior officials told Reuters on Sunday. RBC Capital Markets said in a note that although the “purge represents a stunning political development in Saudi Arabia,” it expected “no immediate changes” in the oil policy of Saudi Arabia, which is the world’s biggest exporter of crude oil. “(Mohammed bin Salman) seems strongly committed to anchoring the OPEC agreement deep into 2018 and moving ahead with the Aramco sale,” RBC said. Prince Mohammed’s reforms include a plan to list parts of giant state-owned oil company Saudi Aramco next year, and a higher oil prices is seen as beneficial for the market capitalization of the future listed company. Earlier in Asia, MSCI’s broadest index of Asia-Pacific shares outside Japan .MIAPJ0000PUS slipped 0.2 percent to drift away from Friday’s top of 557.9, the highest since November 2007. South Korea's KOSPI .KS11, which hit a record high last week, skidded 0.6 percent early on before paring losses to 0.3 percent. Hong Kong's Hang Seng Index .HSI fell 0.2 percent. The Hong Kong China Enterprises Index .HSCE lost 0.9 percent. Japan's Nikkei .N225 eked out a small gain to hover around a 21-year peak. CURRENCIES TIGHT The dollar was little changed after investors took profits on its best weekly performance this year, with wariness about the status of the U.S. economy and tax reform plans setting the tone. It briefly popped to a eight-month high against the Japanese yen JPY=EBS in Asian trades but, with last week's U.S. jobs data having been relatively underwhelming, London-based traders were a bit more cautious. The index that measures the greenback against a basket of currencies was less than 0.1 percent lower in morning European trading. .DXY Sentiment towards the greenback was still positive with leveraged funds paring bearish bets to be net long for the first time since late July. [IMM/FX] Related Video “The only reason why investors are not selling the dollar aggressively is because (of) uncertainty around the tax plan progress even though the bond market is flashing a warning sign,” said Viraj Patel, an FX strategist at ING in London. The euro was flat at $1.16100. EUR=EBS The spread between two-year and ten-year U.S. yields at their narrowest in more than a decade. US2YT=TWEB US10YT=TWEB Spot gold XAU= was steady at $1,271.50 an ounce.