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Saudi ‘Davos in the Desert’ Attendees Are Dropping Out

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Saudi ‘Davos in the Desert’ Attendees Are Dropping Out

  • Viacom CEO won’t go; Uber boss to skip unless new facts emerge
  • Trump disinclined to block Saudi arms sales despite pressure
The disappearance of Jamal Khashoggi

The mysterious disappearance of a prominent Saudi government critic is prompting some company 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 Jamal Khashoggi, a Washington Post columnist who lived in self-imposed exile, was murdered in the kingdom’s 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 Washington 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 in just two weeks. Billionaire Richard Branson sees the case as a potential game-changer for companies doing business with Saudi Arabia, halting Virgin Group’s talks for the Saudi sovereign wealth fund to invest in a space venture.

Confirmed drop-outs now include:

  • Viacom Inc. Chief Executive Officer Bob Bakish
  • Uber Technologies Inc. CEO Dara Khosrowshahi, who won’t attend “unless a substantially different set of facts emerges”
  • Venture capitalist Steve Case, pending “further information”
  • Los Angeles Times owner Patrick Soon-Shiong
  • HP Inc. executive Joanna Popper
  • Andy Rubin, creator of the Android mobile operating system
  • Rodger Novak, co-founder of Crispr Therapeutics AG

The event, unofficially tagged with the “Davos” title, features chief executives like 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 the crown prince, 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.

But Saudi Arabia’s premier investment event is now being overshadowed. President Donald 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 arm sales to the Saudi government, as senators in his own party have suggested.


Mohammed bin Salman

Photographer: Mohammed al-Shaikh/AFP via Getty Images

“We are closely monitoring the situation,” Brian Beades, a spokesman for the U.S. asset-management giant BlackRock, 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.

Speakers booked include JPMorgan Chase & Co. CEO Jamie Dimon. The U.S. bank declined to comment on whether Dimon still plans to attend. The event has no links to the World Economic Forum, which hosts an annual summit in Davos, Switzerland.

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.”

The New York Times, which was a media sponsor of the conference, has pulled out. CNN announced on Friday that it’s withdrawn its participation, while the Financial Times said it wouldn’t partner with the event while Khashoggi’s disappearance remains unexplained. Bloomberg has also pulled out of the event as a media partner, a spokesperson said.

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, he said the event 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.” Technology figures slated 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 startup Improbable Worlds Ltd., won’t be attending. Improbable raised $502 million 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 Mnuchin and International Monetary Fund Director Christine Lagarde told reporters in Bali, Indonesia, on Saturday they still plan to attend. So too does Moelis & Co.’s Ken Moelis, a representative for the boutique investment bank said.

“Horrifying things have been reported, and I am horrified. But I have to conduct the business of the IMF in all corners of the world,” Lagarde said in Bali, where the annual IMF meetings are taking place.

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

Last year, Prince Mohammed used the FII to unveil plans for Neom, a $500 billion high-tech mega city. The venture attracted former U.S. Energy Secretary Ernest 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.

Read more: Who is Jamal Khashoggi?: QuickTake

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,” he said.

Steffen Hertog, an associate professor at the London School of Economics, said the CEOs of companies with a strong corporate and social responsibility profile, especially U.S. tech companies, “must now be weighing reputational risks differently.” “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 by Lucas Shaw, Sarah McBride, Gillian Tan, Mark Milian, Nico Grant, Michael Sin, Eric Newcomer, Stefania Bianchi, Keith Campbell, Mary Romano, Donna Abu-Nasr, Anna Molin, and Mark Williams

(Corrects value of Improbable raising in 13th paragraph.)