Will Alwaleed make up with Forbes or will this fake front cover be the closest he gets to being featured positively in the magazine again? (picture credit: Forbes)
In terms of Saudi Arabia and the Middle East, they don’t come much bigger than Alwaleed Bin Talal Al Saud. The ‘Rainbow Prince’ and grandson of the founder of the state of Saudi Arabia, is one of the world’s richest men. But recently his fortunes have taken a tumble. The Prince has taken offense to Forbes magazine this year during the publication’s compiling of its annual Rich List. The publication, which is the leading authority on the world’s richest people, has been accused of libel by Alwaleed over a claim that it underestimated his fortune by $9.6bn through stock market manipulations of his publicly-listed company Kingdom Holding.
Alwaleed, who’s often named the richest businessman in the Middle East, has made his anger with Forbes well-known to the media through a decision to take Forbes to the high court in London. His legal counsel has filed a defamation claim against the Forbes publisher, Forbes editor Randall Lane and two Forbes journalists for undermining his name. The prince insists that he’s worth closer to $30 billion, which would take him from the 26th richest person on the Forbes Rich List to a ranking within the top ten.
“The basis for actively pursuing a legal action against Forbes would not be about ranking on some list or personal wealth, it is about correcting seriously defamatory comments that have been made about HRH Prince Alwaleed as an individual and Kingdom Holding Company.”
While the prince has played his hand, the question is was this the right reaction? Was bringing everything to the surface the best action Alwaleed could have taken? Forbes initially responded to Alwaleed’s anger the same way that most top-tier publications do, by rebuking his claims through a research-based argument. Below are some excerpts from the feature.
“That [Forbes] list is how he wants the world to judge his success or his stature,” says one of the prince’s former lieutenants, who, like almost all his ex-colleagues, spoke on the condition of anonymity for fear of reprisal from the Arab world’s richest man. “It’s a very big thing for him.” Various thresholds–a top 20 or top 10 position–are stated goals in the palace, these ex-employees say.
Forbes ran down a whole history of its dealings with Alwaleed in relation to the Rich List and the excerpts below don’t paint the prince in a good light (as one may expect following such a fall-out).
“That [first] outreach [to Forbes] proved to be the first in what is now a quarter-century of intermittent lobbying, cajoling and threatening when it comes to his net worth listing. Of the 1,426 billionaires on our list, not one–not even the vainglorious Donald Trump–goes to greater measure to try to affect his or her ranking.
In 2006 when FORBES estimated that the prince was actually worth $7 billion less than he said he was, he called me at home the day after the list was released, sounding nearly in tears. “What do you want?” he pleaded, offering up his private banker in Switzerland. “Tell me what you need.” Several years ago he had Kingdom Holding’s chief financial officer fly from Riyadh to New York a few weeks before the list came out to ensure that FORBES used his stated numbers. The CFO and a companion said they were not to leave the editor’s office until that commitment was secured.”
As can be expected, when you take on a global publication and accuse it of lies, that publication isn’t going to take things lightly. Forbes has run subsequent pieces on Alwaleed contradicting his uncle, the King of Saudi Arabia, in an article entitled Is Prince Alwaleed Trying To Undermine The Saudi King? The piece focused on Forbes initial allegations that the stock market was manipulated to suit the valuation of the Alwaleed-owned investment vehicle Kingdom Holding.
In my article about Prince Alwaleed that Forbes published in March, we quote a former employee of Alwaleed’s, who describes the Saudi stock market as follows: “The players are not many. They come in with big funds, and they buy from each other. There are no casinos. It’s the gambling site of the Saudis.”
As the Forbes writer Kerry Dolan notes, stock market manipulation is an issue that the King himself has taken umbrage with. As a journalist in the country, market manipulation of stocks on the Saudi Bourse Tadawal is well-known and many Saudis will openly tell you whom they suspect of manipulating pricing.
Forbes has also published a very classy picture library detailing what it describes as The Fabulous Life of Price Alwaleed Bin Talal AlSaud (It’s an interesting read, but did Forbes have to drop to tabloid level?).
More recent events have also, in my mind, put Alwaleed’s decision to take on Forbes into a different context. The prince has been involved in another civil case in a London court after himself being sued by a Jordanian businesswoman named Daad Sharab who says she was not paid a promised $10 million commission for brokering the sale of a jet owned by Alwaleed to Libya’s former leader Muammar Gaddafi. The following comments were noted during the cross-examination of Alwaleed by Reuters.
[Alwaleed] repeated time and again that the agreement all along had been that Sharab would receive an amount that would be decided “at my discretion”, and she overstepped the mark by asking for $10 million.
“She did not respect the fact that it was my discretion … Discretion means I have all the right to do whatever I want,” Alwaleed said. “When she came with 10 (million dollars) I went to zero.”
These comments prompted Sharab’s lawyer, Clive Freedman, to ask the prince whether his discretion was supposed to be exercised reasonably, or “like the discretion of an absolute ruler who follows his every whim”.
Freedman accused the prince of making up his evidence as he went along and of being a “debt-dodger” who had refused to pay Sharab for years of work on his behalf, giving no reason until forced to by litigation.
The prince said he did not lie, adding that Sharab had understood all along that she would be paid at his discretion and no one had forced her to work for him on those terms.
But Judge Peter Smith expressed surprised at the prince’s defense. “Nobody is going to do business with you if it relies on your discretion and your discretion becomes capricious,” the judge told the prince.
“Your case then is that your discretion entitles you to not pay her anything? I thought you were an honorable man and you wouldn’t take advantage of people in this way,” he said.
The judge said that it would be better for the parties to settle the case out of court, warning that one or both parties were at risk of being branded liars in his judgment. “I cannot believe that’s in the interest of either of you,” he said.
More recently, at the end of June, one of Kingdom Holding’s board members stepped down from his role for personal reasons. While Ahmed Halawani, who led private equity investments for the prince, may have felt it was time to leave Alwaleed after ten years of service, did recent pressures influence his decision?
And finally, there’s the case of another of Alwaleed’s former business partners. Pierre Daher, the CEO of Lebanese television station LBC International, has given several interviews with Dubai-based marketing publications focusing on his fall-out with Alwaleed. The story is another fascinating read, and is well worth your time.
In all of this, the focus shifts from the other party to Alwaleed. The issues of transparency and of trust keep repeating themselves. Who do we believe? Putting out a media statement is a very different thing to taking another party to court. As Alwaleed has already seen himself this summer, a London court is very different from the Middle East.
Alwaleed has excellent media relations in the Middle East, where he’s seldom questioned (Alwaleed owns a minority stake in several media outlets globally and locally, including in the region’s largest publisher Saudi Research and Publishing Group). But was it wise to openly question and then take to court a global title such as Forbes? We will soon see how this plays out, but I for one am looking forward to what should be an explosive trial between Forbes and Alwaleed.