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SoftBank and the Saudis

SNA (Tokyo) — SoftBank CEO Masayoshi Son is trapped in the middle of the international scandal caused by the murder of Saudi Arabian journalist Jamal Khashoggi.

Khashoggi, a critic of Saudi Crown Prince Mohammed bin Salman, was murdered upon entering the Saudi consulate in Istanbul on October 2. His body has yet to be found. Evidence points to Crown Prince Mohammed bin Salman—often referred to as MBS—as the most likely culprit for ordering the assassination.

Masayoshi Son’s problem is that MBS is also the single largest investor in his US$93 billion Vision Fund, which provides funding to expanding tech companies such as Uber. While many have denounced or cut ties with the Saudi government following this incident, Son has not.

Vision Fund is sponsored by MBS because it has potential to benefit a Saudi initiative he is spearheading, called Vision 2030. The goal of Vision 2030 is to diversify Saudi Arabia’s economy and move away from its reliance on the oil industry, as well as to “build on [their] leading role as the heart of Arab and Islamic worlds,” according to the Saudi government. This includes a plan to develop nuclear energy, which was announced by MBS in early November and is a significant step away from the dominance of oil.

Managing Director of the Public Investment Fund of Saudi Arabia Yasir bin Othman al-Rumayyan has stated that investment in the Vision Fund is an important part of “building a portfolio that is diversified across sectors, asset classes and geographies,” and he expects that this investment will help the Saudi government “develop a diversified, knowledge-based economy.”

Despite his modernizing veneer, there is evidently a darkness within MBS as well. Upon becoming crown prince in 2015, MBS was promoted to the position of Minister of Defense and shortly afterwards he launched a costly military campaign in Yemen in which Saudi forces committed and attempted to cover war crimes against Yemeni civilians.

Jamal Khashoggi, who had a very impressive career as a journalist spanning several decades, served as an advisor to the Saudi royal family. However, last year he fell out of favor and went into self-imposed exile in the United States, where he began to publicly criticize the MBS’ policies.

Khashoggi believed he would be safe visiting a Saudi consulate to request personal documents. His first trip to the consulate in Istanbul on September 28 went without incident. He requested proof of divorce from his ex-wife, and made an appointment to return on October 2 to retrieve his documents. In the early hours of October 2, before Khashoggi’s appointment, teams of Saudi operatives flew from Riyadh to Istanbul, traveled to the consulate in vans, and systematically removed the CCTV inside the building. A Turkish investigation has revealed footage of the vans arriving to the consulate, where the operatives then waited for Khashoggi to arrive. Current evidence suggests that Khashoggi was killed immediately upon entering the building.

The Saudi narrative on this sequence of events has changed drastically over the last month. The initial statement, delivered by MBS, claimed that Khashoggi left the consulate after a few minutes or one hour, which was clearly untrue considering that Khashoggi’s fiancee waited outside for him for ten hours.

Ultimately, on October 20, Saudi state television announced that Khashoggi was in fact killed in the consulate, but the official account is that the perpetrators were a team of rogue Saudis, which is highly unlikely considering the political order within the Saudi government. It is clear that this operation was organized by the Saudi government, and almost certainly originated with MBS, whose firm grip on power within the kingdom is undisputed.

In response, many business leaders stayed away from Saudi Arabia’s investment conference, the so-called “Davos in the Desert,” held in late October. Despite many Asian and specifically Japanese investors attending the conference, Masayoshi Son did not—even though he was in Riyadh at the time.

However, Masayoshi Son and Vision Fund have refused to cut ties with MBS. In fact, SoftBank reaffirmed Saudi investment on November 5, after news that quarterly profits had increased five times thanks to returns from Vision Fund. This reaffirmation quashes any speculation on a split between Son and MBS.

Son’s first comments about the incident condemned the killing, but claimed that Vision Fund still has a “responsibility” to promote the diversification of their economy: “We also have a responsibility that we must uphold for the people of Saudi Arabia instead of turning our backs against them.”

45% of SoftBank’s annual earnings came from Vision Fund. Son’s commitment to the Saudis is clearly motivated by the promise of additional profit.

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