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What money can't buy
Saudi prince snubbed by New York

By Iqbal Latif
October 24, 2001
The Iranian

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 about.

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 controversy.

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 from here.

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