Employees of western firms could face jail time for cooperating with LIV-PGA senate probe
Saudi Arabia has warned US-based consulting companies that their employees could be jailed if the firms hand over documents that detail their work for the kingdom on the planned merger of the PGA Tour with LIV Golf.
The executives of consulting giants BCG and McKinsey - along with smaller firms Teneo and M. Klein & Company - appeared on Tuesday in front of a US Senate Committee looking into Saudi Arabia’s sports investments.
Lawmakers grilled the executives for handing over only a fraction of the information that Congress requested, in a subpoena on their work with Saudi Arabia.
Democratic Senator Richard Blumenthal, the chair of the subcommittee, held up a piece of paper covered in black redactions, which he called “laughable”.
“A lot of them look like this,” he said, referring to thousands of documents the US and UK consulting firms submitted, adding that instead of detailed information they included "press clippings, press releases, and public documents".
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Saudi Arabia’s public investment fund (PIF) filed lawsuits in the Gulf kingdom to block the four consulting firms from responding to the US subpoenas on the grounds that the information threatened the kingdom's national security.
“What are they hiding?” an irate Blumenthal asked. “Investments in LIV Golf are a matter of national security?"
Jail time
Western executives defended themselves, saying that Saudi courts warned them company employees will face jail time if they comply with Congress. The executives said they have launched lawsuits against PIF, which is chaired by Crown Prince Mohammed Bin Salman, to release more information.
"The PIF has been explicit that the disclosure of information relating to BCG’s work for PIF is a violation of Saudi law, which ‘imposes criminal penalties for disclosing or disseminating such information including imprisonment for a maximum of 20 years’,” Rich Lesser, of BCG, told lawmakers.
Michael Klein, a seasoned dealmaker with the Saudis who helped broker last year’s planned merger between PIF-backed LIV Golf and the PGA, said the Saudi court orders “expose me and my employees to not just civil liability, but criminal penalties”.
“That is simply not a risk I can take for myself or for my employees.”
McKinsey’s Bob Sternfels said the US consulting giant had 400 employees in the kingdom, including nine Americans, when asked by lawmakers who could be jailed by Saudi Authorities.
Blumenthal said it was “simply staggering” that the companies were going along with Saudi Arabia’s demand they withhold information on the grounds of sovereign immunity and that they were using the Saudi warning of jail time “to justify their refusal to comply with a duly issued congressional subpoena”.
“You’ve chosen the Saudi side, not the Americans’."
In a statement provided to Middle East Eye, PIF said it is "committed to working with the Subcommittee in good faith," and was making "significant efforts to facilitate the production of requested information from our advisors consistent with the laws of Saudi Arabia, which should be recognized like those of any other country."
But even the top Republican on the committee, Senator Ron Johnson, who has voiced scepticism about Congress’ oversight power on a private sports deal, said he had “no sympathy for the Saudi claims of sovereign immunity in this inquiry”.
Saudi Arabia has become a magnet for western consulting firms as it pursues Vision 2030, a plan spearheaded by the PIF to diversify the kingdom’s oil-dependent economy.
London-based Source Global Research estimated that in 2022 consulting revenue in Saudi Arabia was $2bn.
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