What does the corruption crackdown in Saudi Arabia mean for investors? Is it positive for the Kingdom of Saudi Arabia in terms of investment dollars? Should investors run toward the Kingdom now or should they shy their investment dollars away? These and many other questions are being debated now. Both sides have their advocates and at this point, it is not clear who has the better argument.

On the pro side are those who believe that the corruption crackdown should hearten investors as investors typically do not want to deal with corrupt regimes. This is both on the practical and legal basis. Practically, investors do not want to be in a position of increasing demands for illegal bribe payments. From the legal side, no country in the world has laws which make legal the bribery of government officials and many countries have extra-territorial laws such the FCPA which make bribes illegal in the home country of the bribe-maker.

On the con side are investors who were literally staying at the Ritz-Carlton in Riyadh last month and it is now the home of many Saudi princes in a form of gilded cage detention. One un-named (for obvious reasons) investor said, “Half my rolodex is in the Ritz right now.” Those of the con view see the arrests and roundup as arbitrary, capricious and not based on the rule of law. They wonder what will happen to the monies they have invested into Saudi Arabia through these high-profile individuals.

Further many investors and those who have received funds from these extremely wealthy Saudis are worried about those monies. The Saudi government is reported in negotiations with many of those detained to return purloined funds which might well include monies from investors. Also, what happens for monies invested in foreign countries but those detained Saudis? Will it be subject to forfeiture and repatriation?

All of the answers to these questions are open at this point as we are in uncharted waters with the Saudi corruption crackdown. 

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