The outcry over the mysterious disappearance of a prominent Saudi government critic poses a quandary for the impressive lineup of business leaders set to attend a major investment conference sponsored by the desert kingdom's crown prince.
Jamal Khashoggi, a Washington Post columnist who lived in self-imposed exile, was last seen entering the kingdom's consulate in Istanbul on Oct. 2, triggering an allegation by Turkish officials that he may have been murdered there. Saudi officials say Khashoggi had left the building unharmed on the same day.
President Donald Trump has said the U.S. is investigating the case and lawmakers have threatened to take action against Saudi Arabia. The affair also risks overshadowing the three-day Future Investment Initiative, a showcase for 33-year-old Prince Mohammed bin Salman's modernization plan that's scheduled to start in just two weeks.
The second annual Riyadh conference, unofficially dubbed the "Davos in the Desert," features chief executives like Siemens AG's Joe Kaeser _ whose engineering behemoth is a "strategic partner" for the event _ and BlackRock Inc.'s Larry Fink.
"We are closely monitoring the situation," Brian Beades, a spokesman for the 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 arranging and advising licenses earlier in 2018.
Reputational Risk
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 non-resident 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." Viacom Inc. used similar language, saying it's "aware of the reports" of Khashoggi's disappearance and "monitoring the situation closely" when asked if CEO Robert Bakish is still attending.
The New York Times, which was a media sponsor of the conference, has pulled out. Bloomberg Media is among organizations also sponsoring the event and is monitoring the situation.
Major Deal
Part of Prince 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, the crown prince said the event this month would see the sealing of a major investing agreement in the non-oil economy.
Other "strategic partners" for FII include HSBC Holdings Plc and Credit Suisse Group AG, while consulting firms Deloitte, Boston Consulting Group and McKinsey & Co. are listed as "knowledge partners." Speakers booked include JPMorgan Chase & Co. CEO Jamie Dimon. The U.S. bank declined to comment when asked whether Dimon still plans to attend.
Technology figures slated to attend the conference include venture capitalists Steve Case, and Jim Breyer; Google executive Diane Greene; and Uber Technologies Inc. chief Dara Khosrowshahi. Uber took a $3.5 billion investment from the kingdom's Public Investment Fund two years ago. Spokespeople at those firms and companies didn't respond to requests for comment.
U.S. Treasury Secretary Steven Mnuchin is still planning to attend, as is Moelis & Co.'s Ken Moelis, a representative for the boutique firm said.
It's not the first time controversy has overshadowed the FII 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.
Neom Suspensions
Prince Mohammed also used last year's FII to unveil plans for Neom, a $500 billion high-tech mega city that would be built on the kingdom's Red Sea coast. The venture attracted former U.S. Energy Secretary Ernest Moniz to join its advisory board.
Moniz, who served under former President Barack Obama, has now suspended his involvement with Neom until more is known about the fate of Khashoggi, Axios reported.
Sam Altman, president of tech incubator Y Combinator, is conferring with U.S. officials on the situation and is leaning toward suspending his involvement with the Neom board, said a person familiar with the matter, who asked not to be identified because the deliberations are private.
Richard Branson said in a statement that because of the Khashoggi episode he had suspended talks with the Public Investment Fund over a possible stake in his space companies Virgin Galactic and Virgin Orbit. He added 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 in the statement.
A bipartisan group of U.S. senators is forcing the Trump administration to investigate the disappearance of Khashoggi, triggering a human rights probe that could result in sanctions against Saudi officials and entities.
The move appears aimed at prompting a more active response from the administration after an initially restrained reaction, though Trump said Thursday that he's "getting closer than you might think" to discovering the truth.
"CEOs of companies with a strong corporate and social responsibility profile, especially U.S. tech companies, must now be weighing reputational risks differently," said Steffen Hertog, an associate professor at the London School of Economics. "Saudi Arabia is an important market, but it is not as important as, say, China, so it is less costly to make a public stand on political grounds."
(With assistance from Lucas Shaw, Sarah McBride, Gillian Tan and Mark Milian.)
