What money can't buy
Saudi prince snubbed by New York
By Iqbal Latif
October 24, 2001
Who is the largest individual shareholder of Citigroup? CEO Sanford Weill
will tell you "I've never had an individual shareholder who is as big
as he is." The man Weill is referring to is Prince al-Waleed Bin Talal
of Saudi Arabia, the Warren Buffet of Saudi Arabia. As the Economist
put it a couple of years ago, "Of the grandchildren of Ibn Saud, the
warrior who united the Arabian Peninsula in the early years of this century,
none enjoys greater prestige."
The story of the acquisition of Citigroup is remarkable. A close Saudi
source informs that Prince Waleed won a major defence contract after complaining
to King Fahd that minor royals could not compete with the more powerful
ones. He consequently got the contract and invested the entire proceeds
in Citigroup at $9 a share. At the time Citigroup was available at a deep
discount as its very survival was at stake. Discount acquisitions and takeovers
are his trademark.
He was recently at the heart of a major controversy when New York Mayor
Rudy Giuliani turned down Prince Waleed's $10 million contribution towards
post-September 11 relief efforts. The rejection came after the prince released
a statement suggesting a fresh look at "some of the issues that led
to" the terrorist attack, as well as "a more balanced stance toward
the Palestinian cause." Mayor Giuliani countered that this attitude
is "part of the problem"; the prince reportedly replied that his
gift was refused "because there are Jewish pressures and they were
afraid of them."
The world,' fifth-richest man sits alone in a rare moment of tranquility.
Who is he? What is he thinking? Why is he here?
He says about his love of the desert: "Sometimes, I stay alone,
sit alone there for one or two or three hours," he said in an interview
with CNBC. "I really feel serenity, at home, alone, in the middle of
the desert, no lights, only the light of the fire. I feel very much comfortable
in the desert... I am a desert man. You don't have to be born in the desert
to feel that you are from the desert."
The United States, until the donation controversy, had heard of the prince
almost entirely in the financial press, on the strength of an investing
record. He is amongst the investor class of Rupert Murdoch and Ted Turner;
he's one of the world's biggest media tycoons, with major shares in AOL,
News Corporation and Disney. Alongside the Pritzkers and the Hiltons, he
is a leading hotelier, with big chunks of the Four Seasons, Movenpick and
Fairmont chains, along with New York's Plaza Hotel, and George V in Paris.
His giant stake in Citigroup alone totals a cool $10 billion.
It's an understatement that the Saudi elite are not generally admired
for any kind of capitalistic prowess, but Waleed has been an exception.
Certainly he's not in Warren Buffet's league when it comes to analysing
financial markets and securities. Nor does he possess the technological
expertise of a Gates or a Dell. But give the man credit: The prince knew
enough to buy 6.2 million shares of Apple in March of 1997, when it was
trading for about $18 a share. Apple went up to $108. That was nearly $700
million of profit in some 36 months in a high-profile stock that was sitting
right there in front of everyone.
In real estate, too, he is a powerhouse, whose empire stretches from
London's Canary Wharf to a gleaming skyscraper now nearing completion in
Saudi Arabia's capital. At 984 feet, it's as tall as the Eiffel Tower, and
taller than any other building in the Middle East or Europe. The Prince
has got such a reputation for finding good investments that his few poor
decisions, which wiped out his entire internet stake, are rarely talked
In October of 1997, with the markets doing their usual fall swoon, the
prince made two other big bets on technology stocks, buying pieces of Netscape
and Motorola. At first neither move looked particularly astute. Presently
the issue that confronts many investment analysts is that, after this major
controversy with New York, will this unwanted publicity help his holdings?
Will the Prince continue to hold Citigroup? Or like Kuwaiti investments
in BP, or the Iran's investments in Krupp, he may be eased out a little?
Prince Waleed is amongst the rarest of the rich who has broken the taboo
of buying second hand luxury. Amongst the richest of the world, it is considered
unethical to buy someone else's second hand luxury but rich as he is, the
Prince hates to pay retail. "I do not like to buy something that's
expensive," the Prince explains. "Take my boat for example. I
had this situation whereby this boat, this yacht was offered to me at a
very inexpensive price. Basically at 20 percent of its value. And I wished
to have a boat. And I was supposed to build a boat. So I aborted that concept
and I just bought that boat."
Like mostly everything the Prince owns, the planes, too, were bought
at a deep discount. The Airbus from his pal, the Sultan of Brunei, who was
in a cash crunch. The Boeing from Gulf Air, which was also in trouble. The
jets are used only for himself and his family. The Prince doesn't fly much
"only about once a month, tops." But when he does, he does so
in style. The Airbus, decorated by its previous owner, features wall-to-wall
silk carpets and solid platinum trim, with custom-designed platinum cutlery
to match. The Boeing's interior is more subdued, accented in the Prince's
trademark colours, green and tan. Waleed himself approved its design, down
to the flight attendants, uniforms. And though he barely sleeps on land,
much less in the air, the planes each feature a bedroom, just in case, along
with a full-sized master bathroom and shower.
Ah yes, the boat. Ocean liner is more like it. At 283 feet, it's nearly
as long as a football field and ranks as one of the world's largest private
pleasure crafts. It, too, came from the Sultan by way of billionaire investors
Adnan Kashoggi and Donald Trump. In the end, none of them could afford it
leaving the Prince to buy it at the "fire sale" price of just
$19 million. Its replacement value now: $100 million.
From a nondescript, two-story building on the outskirts of Riyadh, Waleed
runs his global empire. Staff of fewer than three-dozen professionals oversees
his investments, his travel plans, and his image. Lest their mission ever
be in doubt, reminders of the fruits of their labours "the logos of
every brand in which the Prince has an investment " are everywhere;
at his home, on the wall behind the Prince's desk, on his boat and on his
plane. Everywhere, also, are TV sets! An avid viewer, the Prince wants to
know the moment the news breaks. It certainly seems reasonable to say that
among members of the Saudi royal family, few have bought into America"literally"
the way Waleed has.
"You can quote me," Waleed says in a recent Newsweek
interview responding to the returned-donation flap. "I am an ally of
America." This is why it really was rather surprising to find him tacking
onto his $10 million gift rhetoric that he must have known might spark a
Waleed is said to have favoured loosening things up a bit in his home
country's famously closed and strict society, but at the moment he doesn't
seem to be putting much emphasis on that as one of the "issues"
in need of renewed scrutiny. It will be interesting to see how he proceeds