Mohammed bin Salman (MBS) is probably the most talked about crown prince in the history of the Wahhabi kingdom, in a political culture where leaders are usually careful not to air their dirty laundry in public and fear abrupt decisions and risk-taking above all else.
Saudi Arabia’s MBS: How the crown prince got his start in business
Mohammed bin Salman realised very early on that he would need a great deal of money if he wanted to have any political sway in the Saudi kingdom. Accordingly, he decided to throw himself into the business world in his own bold, rough and tumble way." In the third part of our series, we look at how the teen MBS veered onto a new path.
This is part 3 of 6-part series.
During a conversation with a cousin, the young prince came to the sudden realisation that his father, then-prince Salman (he would become king in 2015), was far from what the Saudi royal family considered wealthy. To make matters worse, Salman was in debt, having borrowed money from family members and several businessmen.
Small private prison
MBS was deeply worried by the prospect of the Salman clan being left on the sidelines. While still a teenager, MBS told his father that he wanted to start a business, an atypical ambition for a Saudi royal family member – and one that extracted nothing more than a smile from Salman.
To be sure, the man who was “only” Prince Salman was by that time one of the most influential members of the family. As governor of Riyadh, he had access to a small private prison where he could punish any badly behaved relatives for offences such as public intoxication, unpaid hotel bills in Paris and reckless driving.
“I have several princes in my prison at this moment,” he bragged to the British writer Robert Lacey. In this way, his position meant that he knew all the secrets, big and small, of the Al Saud clan and possessed incriminating information on many of them.
Like every other Saudi prince, Salman owned a villa in Marbella, Spain, and had a horde of servants as well as a fleet of vehicles that would make any automobile collector green with envy.
‘Richer than Al-Waleed bin Talal’
But Salman’s assorted business and real estate investments did not bring in enough money to support such a lavish lifestyle, so he often used his stipend from the King to pay his staff.
Young MBS, who still kept a relatively low profile, was a touch jealous of the son of his cousin Prince Al-Waleed bin Talal – the richest person in Saudi Arabia at the time – who flaunted his Lamborghini on the streets of Riyadh.
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“My goal is to be richer than Al-Waleed bin Talal in two years’ time,” he told a Kuwaiti executive he had contacted as part of a deal involving the import of asphalt from the small country, a new idea that came on the back of his initial business venture. It would also fall through, however, since the Kuwaitis could only provide 40% of the volume MBS had in mind.
At that point, the prince took an interest in investing. By the time he was 16, he had pocketed close to $100,000 from selling gold and luxury watches he had been given by his father and uncle, King Fahd, during religious celebrations. This amount would become his seed money. At first, the value of his share portfolio went up, but soon enough MBS was losing money and in financial ruin, as he would later admit.
Not discouraged, he asked a few prominent Riyadh-based businessmen to lend him some money. Rather than run the risk of vexing the son of the governor of Riyadh, the businessmen accepted his request.
With almost $800,000 in hand, MBS made an array of investments, buying shares in US companies and, starting in 2008, on Riyadh’s Tadawul exchange. Because the handful of companies listed on Tadawul are significantly impacted by government decisions, making money on the exchange is a relatively easy endeavour for someone with close ties to the royal court.
But a few years down the road, MBS was briefly investigated for insider trading.
‘Father of the bullet’
Going in with his full-blooded brothers, he made a wide range of investments, generally in his own name, which is something of a rarity for a Saudi prince. He invested in everything from a waste management company to fish farms, to entities in the trade industry and even a hospital in Louisiana specialising in organ transplants.
Real estate speculation in greater Riyadh was at the time one of the most profitable businesses in Saudi Arabia. MBS teamed up with landowners, who agreed to give him a cut of the revenue generated by property sales, to build developments on greenfield sites. The business model turned out to be lucrative, and the prince began to amass a small fortune.
Then, a rumour made the rounds that MBS had sent an envelope containing a bullet to an owner who deigned to refuse to sell a plot of land to him. Whether true or false, the anecdote earned him the nickname Abu Rasasa, “father of the bullet”, within the royal family. His mafia-like approach to doing business gives an idea of how little he cares for those who get in his way.
His masterstroke was the deal he made in 2008 with US telecom giant Verizon, which took a minority stake in a joint venture involving one of his many companies to bring fibre-optic infrastructure to the kingdom. The partnership helped boost MBS’s growing stature, even though the project never got off the ground. “My son made millions for the family,” Salman is said to have boasted to a guest.
But things would only start to take off after MBS became defence minister in 2015 and then crown prince in 2017, as these positions afforded him the opportunity to rake in billions, as opposed to just millions, of dollars.