SAUDI Arabia said it has only frozen the bank accounts of individuals and not those of the companies they own or manage, as the kingdom seeks to ease tension among global investors over a crackdown that’s seen princes and billionaires arrested.

The action, described by Saudi authorities as an anti-corruption drive, applies only to individual accounts held by “persons of interest”, and not to corporate ones, Saudi Arabian Monetary Authority Governor Ahmed Abdulkarim Alkholifey said in a statement on Tuesday.

“It is business as usual for both banks and corporates,” he said, adding that there are no restrictions on money transfers “through proper banking channels”.

The arrests, which included Prince Al Waleed bin Talal, one of the world’s richest men and a shareholder in such global companies as Citigroup Inc and Apple Inc, have reverberated across board rooms and financial institutions in the biggest Arab economy and globally.

Earlier, three people with knowledge of the matter said the central bank ordered banks in the kingdom to freeze the accounts of dozens of individuals who aren’t under arrest. Already, as much as $33 billion in personal wealth belonging to the richest detainees has been put at risk.

More may be on the way: the regulator sent a list of hundreds of names to lenders, telling them to freeze any accounts linked to them, two of the people said. They asked not to be identified because the information is private. The Saudi attorney general said in a statement released on Monday that weekend arrests of princes, businessmen and officials were only “phase one” of the anti-corruption drive.

The detentions drew support from President Donald Trump but also raised concern among analysts that a power grab was underway. In all, 11 princes, four ministers and dozens of former ministers and well-known businessmen were taken into custody, according to Saudi media and a senior official who spoke on condition of anonymity.

The arrests were under the auspices of an anti-corruption commission that King Salman set up on Saturday, headed by his son and heir, Prince Mohammed bin Salman. The king also dismissed Prince Miteb bin Abdullah from his post as head of the powerful National Guard, taking out one of the last princes who had survived a series of cabinet reshuffles promoting allies of the crown prince.

The events have reinforced speculation that King Salman was clearing any remaining obstacles to his son’s accession to the throne. But they were also lauded by many Saudis bearing the brunt of low oil prices who have long complained that the kingdom’s elite was above the law.

The benchmark Tadawul All Share Index fell as much as 3.1 per cent on Monday before trimming losses to 0.7pc in Riyadh. Prince Al Waleed’s Kingdom Holding plummeted 10pc; it’’ down 21pc since the arrests.

“It’s almost the equivalent of arresting Bill Gates to have Prince Al Waleed bin Talal under arrest,” Robert Jordan, former US ambassador to Saudi Arabia, told Bloomberg TV on Monday.

A genuine push against corruption would add to the credibility of Prince Mohammed’s push to prepare the economy for the post-oil era, including selling a stake in Saudi Aramco and bolstering non-oil revenue, he said. “If it turns out to simply be a power grab, then I think it’s going to hurt the Saudis in the long run, and certainly hurt this crown prince.”

The crackdown also comes amid an escalation in tensions between Saudi Arabia and Shia-ruled Iran, its chief regional rival.

Pro-Iranian Yemeni rebels fired a ballistic missile on Saturday that targeted Riyadh’s international airport for the first time, a move Saudi officials said could amount to an “act of war” by the Islamic Republic. Iranian officials denied any involvement. Earlier that day, Lebanese Prime Minister Saad al-Hariri — a Saudi ally — unexpectedly resigned in a speech from Riyadh, blaming Iran for destabilising his country.

“Investors have been hammered with bad news on the geopolitical front,” said Nabil Al Rantisi, the managing director of Abu Dhabi-based Mena Corp Financial Services. “It’s not easy to see what is coming next.”

Saudi Arabia has welcomed Trump’s promise of a tougher policy against Iran, which he has described as a “rogue state”. Trump’s backing came in a tweet on Tuesday morning from Japan.

“I have great confidence in King Salman and the Crown Prince of Saudi Arabia, they know exactly what they are doing,” the US president said.

A senior Saudi official denied the crackdown had any other purpose than to fight corruption. The accused “will be subject to investigation according to the regular procedures adopted in the Kingdom”, he said.

According to the official, the charges against Prince Al Waleed include money laundering, bribery and extortion of some officials.

Prince Miteb is charged with embezzlement, fraudulent employment and the awarding of projects to his own companies.

Another royal family member, Prince Turki bin Abdullah, is accused of corruption related to a train project, using his influence to win projects for companies affiliated to himself, the official said.

By arrangement with Bloomberg-The Washington Post

Published in Dawn, November 9th, 2017