Investors Fret Over Khashoggi Killing but Still Maintain Saudi Ties

Virgin founder Richard Branson announced he was pulling out of talks on a $1 billion deal with Saudi Arabia over the killing of a Washington Post columnist. State involvement in the killing, “if proved true, would clearly change the ability of any of us in the West to do business with the Saudi government,” Mr. Branson said.

Days later in a text message, Mr. Branson counseled the Saudi crown prince, Mohammed bin Salman, to release female activists his country had imprisoned.

“If you were to pardon these women and a number of men too, it would show the world the Government is truly moving into the 21stCentury,” Mr. Branson texted the crown prince. “It won’t change what happened in Turkey but it would go a long way to start and change people’s view.”

Mr. Branson was one of the first in a parade of CEOs, fund managers and bankers who scrambled to figure out how to preserve their relationships with Prince Mohammed after the murder of the journalist Jamal Khashoggi in Saudi Arabia’s Istanbul embassy in the fall.

Mr. Branson urged Prince Mohammed to change his ways. Others adopted a dual strategy of public condemnation while trying to continue to do business as usual. Some shunned the formality of Saudi Arabia’s high-profile investment conference but pursued informal gatherings instead.

The reason: Many have tied their companies’ future to Saudi money and Crown Prince Mohammed’s wide-ranging economic overhauls.

This whole Khashoggi thing doesn’t mean anything,” said hedge-fund manager John Burbank, who has been one of the U.S.’s most prominent investors in Saudi stocks. “It means much less than the big, sweeping liberalization that’s happening in the kingdom.”

MBS, as Prince Mohammed is known, politely thanked Mr. Branson for his input. A few days later, the crown prince publicly denied involvement in the murder, calling it a heinous crime. The U.S. Central Intelligence Agency has since concluded that he likely ordered the killing.

American investors in Saudi stocks, besides Mr. Burbank, include Peter Thiel and hedge fund Bienville Capital Management, among others. Roughly 4% of the total Saudi market is held by foreigners.

One person’s life doesn’t matter unless it’s MBS’s,” Mr. Burbank says. “Khashoggi doesn’t matter.” He adds that investors who have steered away from Saudi Arabia are hypocrites, because some of them also invest in Russia and Turkey.

Mr. Burbank was among the dozens of Western executives and investors who showed up at the home of Yasir al Rumayyan—chairman of Saudi Arabia’s sovereign Public Investment Fund, which the crown prince oversees—on the eve of the investor conference in October. Over platters piled high with roast lamb, towers of sweets in golden birdcages and champagne flutes of fruit juice, they toasted their relationship beneath palm trees tinted by purple spotlights, attendees said.

SoftBank CEO Masayoshi Son backed out of the conference, but he still showed up at the lamb feast. Uber CEO Dara Khosrowshahi also pulled out of the conference, but Uber co-founder and board member Travis Kalanick was at the party, along with former congressman and current banker Eric Cantor and his boss, banker Ken Moelis, and venture capitalist Jim Breyer. Thiel Capital portfolio manager John MacMahon also appeared at the dinner, and the chief executive of Silicon Valley construction startup Katerra, Michael Marks, attended the investment conference.

Matt Barnard, the CEO of Plenty—an indoor-farming startup with $200 million in backing from a Saudi-backed SoftBank fund—flew to Saudi Arabia for the conference. But he returned home without attending, a Plenty spokeswoman says.

The cost of shunning Saudi Arabia could be high. Some business partners fear losing access to the kingdom in the future if they pull out of Saudi deals now.

Ari Emanuel, the CEO of Hollywood talent agency Endeavor, is negotiating to return a $400 million investment that the Saudi sovereign-wealth fund made in his company earlier this year, people familiar with the company’s plan say.

In the wake of Mr. Khashoggi’s disappearance, Mr. Emanuel said he was “really concerned about it.”

.. “Were there mistakes made? Absolutely there were mistakes made,” said Matt Michelsen, an associate of John Burbank and a Silicon Valley investor. “But this place is changing. I saw Starbucks opening on multiple corners. There are women walking around without abayas. It’s a fundamental shift that’s occurred.”

Liberal Hypocrisy in College Admissions?

The legacy system is affirmative action for the privileged.

We progressives hail opportunity, egalitarianism and diversity. Yet here’s our dirty little secret: Some of our most liberal bastions in America rely on a system of inherited privilege that benefits rich whites at the expense of almost everyone else.

I’m talking about “legacy preferences” that elite universities give to children of graduates. These universities constitute some of the world’s greatest public goods, but they rig admissions to favor applicants who already have had every privilege in life.

.. Most of the best universities in America systematically discriminate in favor of affluent, privileged alumni children. If that isn’t enough to get your kids accepted, donate $5 million to the university, and they’ll get a second look.

.. Reeves noted the irony that in Europe and most of the rest of the world, there is no such explicit system of legacy preferences, yet in supposedly egalitarian America it is formal and systematic.

.. Isn’t it a bit hypocritical that institutions so associated with liberalism should embrace a hereditary aristocratic structure? Ah, never underestimate the power of self-interest to shape people’s views. As Reeves put it dryly: “American liberalism tends to diminish as the issues get closer to home.”

.. having a parent graduate increased the chance of admission at 30 top colleges by 45 percentage points. For example, a candidate who otherwise had a 20 percent shot became a 65 percent prospect with a parent who had graduated from that school.

.. Earlier, a 2004 Princeton study estimated that legacy at top schools was worth an additional 160 points on an SAT, out of 1600 points.

Legacy preferences apparently were introduced in America in the early 1900s as a way to keep out Jewish students. To their credit, some American universities, including M.I.T. — not to mention Oxford and Cambridge in Britain — don’t give a legacy preference.

The top universities say that legacy preferences help create a multigenerational community of alumni, and that’s a legitimate argument. They also note that rewarding donors helps encourage donations that can be used to finance scholarships for needy kids.

Yet on balance, I’m troubled that some of America’s greatest institutions grant a transformative opportunity disproportionately to kids already steeped in advantage, from violin lessons to chess tournaments to SAT coaching. On top of that, letting wealthy families pay for extra consideration feels, to use a technical term, yucky.

Liberals object to the Supreme Court’s Citizens United decision allowing tycoons to buy political influence, so why allow tycoons to buy influence in college admissions?

If a Prince Murders a Journalist, That’s Not a Hiccup

Frankly, it’s a disgrace that Trump administration officials and American business tycoons enabled and applauded M.B.S. as he

  • imprisoned business executives,
  • kidnapped Lebanon’s prime minister,
  • rashly created a crisis with Qatar, and
  • went to war in Yemen to create what the United Nations calls the world’s worst humanitarian crisis there.

Some eight million Yemenis on the edge of starvation there don’t share this bizarre view that M.B.S. is a magnificent reformer.

.. Trump has expressed “great confidence” in M.B.S. and said that he and King Salman “know exactly what they are doing.” Jared Kushner wooed M.B.S. and built a close relationship with him — communicating privately without involving State Department experts — in ways that certainly assisted M.B.S. in his bid to consolidate power for himself.

The bipartisan cheers from Washington, Silicon Valley and Wall Street fed his recklessness. If he could be feted after kidnapping a Lebanese prime minister and slaughtering Yemeni children, why expect a fuss for murdering a mere journalist?

.. M.B.S. knows how to push Americans’ buttons, speaking about reform and playing us like a fiddle. His willingness to sound accepting of Israel may also be one reason Trump and so many Americans were willing to embrace M.B.S. even as he was out of control at home.

In the end, M.B.S. played Kushner, Trump and his other American acolytes for suckers. The White House boasted about $110 billion in arms sales, but nothing close to that came through. Saudi Arabia backed away from Trump’s Middle East peace deal. Financiers salivated over an initial public offering for Aramco, the state-owned oil company, but that keeps getting delayed.

.. The crackdown on corruption is an example of M.B.S.’s manipulation and hypocrisy. It sounded great, but M.B.S. himself has purchased a $300 million castle in France, and a $500 million yacht — and he didn’t buy them by scrimping on his government salary.

.. In fairness, he did allow women to drive. But he also imprisoned the women’s rights activists who had been campaigning for the right to drive.

Saudi Arabia even orchestrated the detention abroad of a women’s rights activist, Loujain al-Hathloul, and her return in handcuffs. She turned 29 in a Saudi jail cell in July, and her marriage has ended. She, and not the prince who imprisons her, is the heroic reformer.

.. The crown prince showed his sensitivity and unpredictability in August when Canada’s foreign ministry tweeted concern about the jailing of Saudi women’s rights activistsSaudi Arabia went nuts, canceling flights, telling 8,300 Saudi students to leave Canada, expelling the Canadian ambassador and withdrawing investments. All for a tweet.

.. Western companies should back out of M.B.S.’s Future Investment Initiative conference later this month. That includes you,

  • Mastercard,
  • McKinsey,
  • Credit Suisse,
  • Siemens,
  • HSBC,
  • BCG,
  • EY,
  • Bain and
  • Deloitte,

all listed on the conference website as partners of the event.

.. We need an international investigation, perhaps overseen by the United Nations, of what happened to Jamal. In the United States, we also must investigate whether Saudis bought influence with spending that benefited the Trump family, such as $270,000 spent as of early 2017 by a lobbying firm for Saudi Arabia at the Trump hotel in Washington. The Washington Post reported that Saudi bookings at Trump Chicago increased 169 percent from the first half of 2016 to the first half of this year, and that the general manager of a Trump hotel in New York told investors that revenues rose partly because of “a last-minute visit to New York by the Crown Prince of Saudi Arabia.”

.. If Saudi Arabia cannot show that Jamal is safe and sound, NATO countries should jointly expel Saudi ambassadors and suspend weapons sales. The United States should start an investigation under the Magnitsky Act and stand ready to impose sanctions on officials up to M.B.S.

America can also make clear to the Saudi royal family that it should find a new crown prince. A mad prince who murders a journalist, kidnaps a prime minister and starves millions of children should never be celebrated at state dinners, but instead belongs in a prison cell.

The Full-Spectrum Corruption of Donald Trump

It is a stunning turnabout. A party that once spoke with urgency and apparent conviction about the importance of ethical leadership — fidelity, honesty, honor, decency, good manners, setting a good example — has hitched its wagon to the most thoroughly and comprehensively corrupt individual who has ever been elected president. Some of the men who have been elected president have been unscrupulous in certain areas — infidelity, lying, dirty tricks, financial misdeeds — but we’ve never before had the full-spectrum corruption we see in the life of Donald Trump.

.. And the moral indictment against Mr. Trump is obvious and overwhelming. Corruption has been evident in Mr. Trump’s private and public life,

  • in how he has treated his wives,
  • in his business dealings and scams,
  • in his pathological lying and cruelty,
  • in his bullying and shamelessness,
  • in his conspiracy-mongering and appeals to the darkest impulses of Americans. (Senator Bob Corker, a Republican, refers to the president’s race-based comments as a “base stimulator.”)

Mr. Trump’s corruptions are ingrained, the result of a lifetime of habits. It was delusional to think he would change for the better once he became president.

.. Some of us who have been lifelong Republicans and previously served in Republican administrations held out a faint hope that our party would at some point say “Enough!”; that there would be some line Mr. Trump would cross, some boundary he would transgress, some norm he would shatter, some civic guardrail he would uproot, some action he would take, some scheme or scandal he would be involved in that would cause large numbers of Republicans to break with the president. No such luck. Mr. Trump’s corruptions have therefore become theirs. So far there’s been no bottom, and there may never be.

.. the Republican Party’s as-yet unbreakable attachment to Mr. Trump is coming at quite a cost. There is the rank hypocrisy, the squandered ability to venerate public character or criticize Democrats who lack it, and the damage to the white Evangelical movement, which has for the most part enthusiastically rallied to Mr. Trump and as a result has been largely discredited.

.. Mr. Trump and the Republican Party are right now the chief emblem of corruption and cynicism in American political life, of an ethic of might makes right. Dehumanizing others is fashionable and truth is relative. (“Truth isn’t truth,” in the infamous words of Mr. Trump’s lawyer Rudy Giuliani.) They are stripping politics of its high purpose and nobility.

.. A warning to my Republican friends: The worst is yet to come. Thanks to the work of Robert Mueller — a distinguished public servant, not the leader of a “group of Angry Democrat Thugs” — we are going to discover deeper and deeper layers to Mr. Trump’s corruption. When we do, I expect Mr. Trump will unravel further as he feels more cornered, more desperate, more enraged; his behavior will become ever more erratic, disordered and crazed.

Most Republicans, having thrown their MAGA hats over the Trump wall, will stay with him until the end. Was a tax cut, deregulation and court appointments really worth all this?