Saudi Arabia’s sweeping anti-corruption campaign, which has led to the detention of dozens of high-profile figures including princes, ministers and tycoons, could improve accountability and governance in the Gulf kingdom, according to new research by Bank of America Merrill Lynch.
Its MENA economist Jean-Michel Saliba said if resolved successfully, and coupled with higher oil prices, this could lead to higher medium-term growth potential and economic growth.
He added: “The anti-corruption drive could improve accountability and governance, especially if transparency improves. However, the potential impact of the probe on the broader backdrop, investment and capital outflows bears watching.
“While raising uncertainty, the probe likely supports reform efforts and provide grounds for continuing to gear energy policy towards supporting oil prices.”
On Tuesday, Saudi attorney general Sheikh Saud al-Mojeb said 320 people were called in for questioning and 159 people are currently being detained, many of whom have agreed to a “settlement”, or handing over allegedly ill-gotten gains to the Saudi state treasury.
The attorney general has previously said he estimates at least $100 billion has been lost in embezzlement or corruption over several decades. He added the bank accounts of 376 people have been frozen, all of whom are detained or linked to corruption allegations.
Saliba noted in his research note that the possible confiscation of embezzled funds to return them to the state treasury is unlikely to provide much support to Central Bank foreign reserves.
“A maximum of $100 billion in offshore funds was held by the private sector at year-end 2015. We would expect only a small fraction of that to be at risk (which would require proof of links to corrupt practices) within this probe, and expect assets frozen to include material domestic holdings,” he added.
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