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Prince Alwaleed and the Curious Case of Kingdom Holding Stock

March 06, 2013 | About:
Canadian Value

CanadianValue

210 followers
The controversial Forbes piece that has angered one of the world's richest investors:

Any reporter who shows an interest in Prince Alwaleed Bin Talal of Saudi Arabia can expect at some point to get a little gift from His Royal Highness. A driver will courier over a thick, tall green leather satchel, embossed with the oasis palm logo and name of Alwaleed’s Kingdom Holding Co., weighing at least 10 pounds. Like Russian nesting dolls, the green leather satchel reveals a green leather-bound sleeve, which in turn encases a green leather-bound annual report. About the only thing not shrouded in leather are thin versions of a dozen of the best-known magazines in the world, each boasting the prince on its cover.

These magazines are the most telling items within the prince’s big-bucks information dump. Fronting Vanity Fair, he strikes a jet-set pose, complete with reflective sunglasses, a powder-blue sports coat and an open-collar shirt. He’s on two Time 100 covers, once in a collage with the likes of George Soros,Li Ka-shing and Queen Rania, and a second solo, donning the classic Saudi thobe and ghutra. There’s even a FORBES, from which he stares out powerfully, in a Steve Jobs black turtleneck, above the text “The world’s shrewdest businessman.” But the most instructive piece of information is consistent across them all: None are real magazines. Rather than simply send out press clippings, the prince’s staff has concocted or rejiggered magazine covers, which they bind atop article mentions on beautiful high-gloss paper.

Image is everything to Prince Alwaleed, with specific care paid to those who can provide outside validation. He meets with very important people. Just ask him. His staff issues a press release with a photo seemingly every time he interacts with someone big (Bill Gates), someone who might someday be big (Twitter CEO Dick Costolo) or just someone who sounds big (Burkina Faso’s ambassador to Saudi Arabia). In 2003 he was photographed behind George W. Bush, Jordan’s King Abdullah, Saudi Crown Prince Abdullah and Egyptian President Hosni Mubarak. When his authorized biography, Alwaleed: Businessman, Billionaire, Prince, appeared in 2005, that photo appeared on the back cover–this time with Alwaleed in front, courtesy, the prince later admitted to FORBES, of Photoshop. For several months beginning in late 2011, the prince even began blind copying or forwarding me almost daily text messages he sent: Some were to the spouse of a European president; others to a well-known top executive at a large U.S. technology firm; still more were to the hosts of several cable-TV talk shows. The contents were shared off the record–but the intent to impress was not.

In terms of outside validation, though, his paramount priority, according to seven people who used to work for him, is FORBES’ list of global billionaires. “That list is how he wants the world to judge his success or his stature,” says one of the prince’s former lieutenants, who, like almost all his ex-colleagues, spoke on the condition of anonymity for fear of reprisal from the Arab world’s richest man. “It’s a very big thing for him.” Various thresholds–a top 20 or top 10 position–are stated goals in the palace, these ex-employees say.

But for the past few years former Alwaleed executives have been telling me that the prince, while indeed one of the richest men in the world, systematically exaggerates his net worth by several billion dollars. This led FORBES to a deeper examination of his wealth, and a stark conclusion: The value that the prince puts on his holdings at times feels like an alternate reality, including his publicly traded Kingdom Holding, which rises and falls based on factors that, coincidentally, seem more tied to the FORBES billionaires list than fundamentals.

Alwaleed, 58, wouldn’t speak with FORBES for this article, but his CFO, Shadi Sanbar, was vociferous: “I never knew that FORBES was a magazine of sensational dirt-digging and rumor-filled stories.” Our discrepancy over his net worth says a lot about the prince, and the process of divining someone’s true wealth.

THE PRINCE FIRST came on FORBES’ wealth-hunting radar in 1988, a year after our first Billionaires issue came out. The source: the prince himself, who contacted a FORBES reporter to let him know just how successful his Kingdom Establishment for Trading & Contracting company was–and to make clear that he belonged on the new list.

That outreach proved to be the first in what is now a quarter-century of intermittent lobbying, cajoling and threatening when it comes to his net worth listing. Of the 1,426 billionaires on our list, not one–not even the vainglorious Donald Trump–goes to greater measure to try to affect his or her ranking. In 2006 when FORBES estimated that the prince was actually worth $7 billion less than he said he was, he called me at home the day after the list was released, sounding nearly in tears. “What do you want?” he pleaded, offering up his private banker in Switzerland. “Tell me what you need.” Several years ago he had Kingdom Holding’s chief financial officer fly from Riyadh to New York a few weeks before the list came out to ensure that FORBES used his stated numbers. The CFO and a companion said they were not to leave the editor’s office until that commitment was secured. (After a granular discussion the editor convinced them to leave with a promise to review everything.) In 2008, I spent a week with him in Riyadh, at his behest, touring his palaces and airplanes and observing what he told me was $700 million worth of jewels.

Read the complete article here.

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CanadianValue
http://valueinvestorcanada.blogspot.com/

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