The mysterious disappearance of a prominent critic of the Saudi Arabian government is prompting some business leaders to back away from the “Davos in the Desert” event intended to showcase Prince Mohammed bin Salman’s modernization plan for the desert kingdom.
Turkish officials allege that Jamal Khashoggi, a Washington Post columnist who lived in self-imposed exile, was murdered in the Saudi Consulate in Istanbul after entering the building on Oct. 2. They now say they have audio and video recordings that show a Saudi security team detained Khashoggi in the consulate before killing him and dismembering his body, the Post reported. Saudi officials say Khashoggi left the building unharmed.
The affair is eclipsing the three-day Future Investment Initiative, scheduled to start in Riyadh, the Saudi capital, in two weeks. Virgin Group founder Richard Branson sees the Khashoggi case as a potential game-changer for companies doing business with Saudi Arabia. He ended Virgin Group’s talks with the Saudi sovereign wealth fund to invest in a space venture.
Other confirmed dropouts now include:
• Bob Bakish, Viacom Inc. chief executive
• Dara Khosrowshahi, Uber Technologies Inc. CEO
• Steve Case, venture capitalist
• Dr. Patrick Soon-Shiong, Los Angeles Times owner
• Robert Simonds, STX Entertainment CEO
• Joanna Popper, HP Inc. virtual reality executive
• Andy Rubin, creator of the Android mobile operating system
• Rodger Novak, co-founder of CRISPR Therapeutics AG
The Future Investment Initiative features CEOs such as Siemens AG’s Joe Kaeser — whose engineering behemoth is a “strategic partner” for the conference — and BlackRock Inc.’s Larry Fink. The gathering is co-hosted by the kingdom’s massive sovereign wealth fund, the Public Investment Fund, and Crown Prince Mohammed, who gave a speech at the event last year and took selfies with attendees. Uber got a $3.5-billion investment from the PIF two years ago.
Saudi Arabia’s premier investment event is now being overshadowed by Khashoggi’s disappearance. President Trump, who has forged a close relationship with the Saudi rulers, has said the U.S. is investigating the case, and lawmakers have threatened to take action against the kingdom. Trump said he’s disinclined to block arms sales to the Saudi government, as senators in his own party have suggested.
“We are closely monitoring the situation,” Brian Beades, a spokesman for BlackRock, a U.S. asset-management giant, said when asked whether Fink still planned to attend. A year ago, BlackRock’s CEO was one of the attendees, publicly praising the direction of the Saudi economy. The firm received local licenses earlier in 2018.
Speakers booked include JPMorgan Chase & Co. CEO Jamie Dimon. The U.S. bank has declined to comment on whether Dimon still plans to attend.
The CEOs must strike a balance between “the reputational risk they run by being associated with what seems to be very disturbing developments” and “their long-term business interest” in Saudi Arabia, according to Richard LeBaron, a former U.S. ambassador to Kuwait who is now a nonresident senior fellow at the Atlantic Council.
Siemens’ head of financial media relations, Philipp Encz, said that for now there are no changes to Kaeser’s plans, but the company is “following the situation closely.”
The New York Times, which was a media sponsor of the conference, has pulled out. CNN announced Friday that it’s withdrawn its participation, while the Financial Times said it wouldn’t partner on the event while Khashoggi’s disappearance remains unexplained. Bloomberg has also pulled out of the event as a media partner, a spokesperson said.
Part of Mohammed’s plan to overhaul the Saudi economy is an attempt to attract foreign direct investment into the kingdom. In an interview with Bloomberg last week, he said the event would see the sealing of a major investing agreement in the non-oil economy.
Other “strategic partners” for the event include HSBC Holdings Plc and Credit Suisse Group AG, while consulting firms Deloitte, Boston Consulting Group and McKinsey & Co. are listed as “knowledge partners.” Technology figures scheduled to attend the conference include venture capitalist Jim Breyer and Google executive Diane Greene. Spokespeople at those firms didn’t respond to requests for comment.
Herman Narula, CEO of the start-up Improbable Worlds Ltd., won’t be attending. Improbable raised $502 billion from investors led by SoftBank Group Corp. last year. The deal happened as SoftBank was finalizing its $100-billion Vision Fund, with backers including Saudi Arabia.
U.S. Treasury Secretary Steven T. Mnuchin is still planning to attend, as is Moelis & Co.’s Ken Moelis, a representative for the boutique investment bank said.
It’s not the first time controversy has overshadowed the event. Scores of the kingdom’s businessmen, princes and officials were rounded up in the Ritz-Carlton Hotel just days after last year’s conference in what the government described as a crackdown on corruption.
Last year, Mohammed used the conference to unveil plans for Neom, a $500-billion high-tech mega city. The venture attracted former U.S. Energy Secretary Ernest J. Moniz to its advisory board. Sam Altman, president of tech incubator Y Combinator, suspended his involvement with the Neom board. Moniz took the same action until more is known about Khashoggi’s fate, Axios reported.
Branson suspended talks with the PIF over a possible stake in his space companies Virgin Galactic and Virgin Orbit, he said, adding that he also was suspending his directorships in Saudi Red Sea tourism projects.
“What has reportedly happened in Turkey around the disappearance of journalist Jamal Khashoggi, if proved true, would clearly change the ability of any of us in the West to do business with the Saudi government,” Branson said.