A Question of Interest: The Paralysis of Saudi Banking by Peter Wilson

Author:Peter Wilson [Wilson, Peter]
Language: eng
Format: epub
Tags: Political Science, World, Middle Eastern, Social Science, Regional Studies
ISBN: 9780429714726
Google: 5dtJEAAAQBAJ
Goodreads: 59447427
Publisher: Routledge
Published: 2021-11-28T00:00:00+00:00

SPECIAL COMMITTEE FOR PRINCES

One issue that has always confounded the Kingdom’s bankers has been what to do when an errant borrower is a member of the royal family. Among the thousands of bad loans were hundreds made to royals. As a general rule, the banks proceeded cautiously, making judgments on a case-by-case basis, taking into account the position and power of the borrower. The “family” was divided into roughly three sections: King Fahd, Crown Prince Abdullah and Defense and Aviation Minister Prince Sultan and their respective families formed the first echelon, against whom the banks never moved. The second tier was composed of the remaining members of the Sudairy Seven and other major princes such as the Al-Faisals, against whom the banks often deferred action as well. The third tier, composed of everyone else, was largely open to action, but with the danger they could appeal to the top two tiers for aid against the banks.22

At the end of May, 1985, the House of Saud moved to put its finances in order when a courier went to each of the Kingdom’s banks, delivering to each managing director a letter sealed with green wax. The letter itself was in Arabic and was undated and unsigned. Its only identification was the code: SB-33/4. It took several hours for the recipients to understand its importance as the letter announced the creation of a special body to handle royal debts, the so-called “Committee to Jointly Undertake the Obligations of the Royal Family Princes.” Even today, the committee remains surrounded in mystery. Its chairman and board members are unknown by the Kingdom’s bankers as is its relative effectiveness. According to its preamble written in extremely flowery classical Arabic, the idea for the committee came from a meeting of the royal family to discuss the problem of loans taken out by the House of Saud. “A meeting was held among their Royal Highnesses, the Princes…in order to study die goals and purposes which guarantee the deep traditions which have been inherited with the Royal Family with the assurances upholding God’s Sharia Law and to perform the rights of those to whom the rights are due. And for the purpose of solidarity and mutual support leading to joint guaranty in solving problems which may face any members of the family and to help such members in the solution of such problems. Or to rid such members when they become involved in problems forced upon them by personal or general circumstances and to establish rules governing the resolution of the princes’ circumstances who have been subjected to financial upheavals, difficulties or business or private debts.”23

Membership of the committee, which began operations in the spring of 1985, is limited to “their Royal Highnesses who are burdened with debts to establishments or commercial banks.”24 According to the letter, the committee is limited to 50 to 75 princes with indebtedness ranging from SR5 million to SR30 million. Membership on the committee is subject to the family’s decisions. There are also limited possibilities for leaving the committee.

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