OPINION: Saudi Money Dominates America’s Private Sector — But Doesn’t Go As Far As It Used To

REUTERS/Jonathan Ernst

Matt Cordio Co-founder and President of Skills Pipeline
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The torture and assassination last year of journalist Jamal Khashoggi in Saudi Arabia’s consulate in Istanbul, Turkey, awakened an ethical sleeping giant.

For several news cycles, members of Congress talked openly about cutting off arms sales to the Saudis. People began openly questioning the dirty war that Saudi Arabia has been prosecuting against its neighbor, Yemen, leading to mass starvation.

While the furor has died down some, the reverberations continue. The American government has had a convenient, close, lucrative relationship with the house of Saud. American businesses have followed suit, investing in Saudi enterprises and allowing Saudis, including entities controlled by the Saudi government, to invest a lot of those oil profits here.

What that means is that now is the time for businesses to start reevaluating the debt holding and ownership stakes of Saudi interests. Many people regard this as dirty money, both enabled by and enabling Islamism, human rights atrocities, and more ethical problems than you can launch a drone at. It would not be at all surprising to see a large divestment campaign hurl down that runway.

Take, for instance, the giant rideshare company Uber. Last year, a group of firms bought billions of dollars’ worth of shares in the company. Vision Fund, managed by the firm SoftBank, ended up the largest single shareholder in the company, and named two representatives to its board of directors, according to Reuters.

Who is behind Vision Fund? The Saudi government’s Public Investment Fund is the largest outside backer in the company. Through this fund, the Saudis have put significant money into a long list of start-ups that includes Wag, Nvidia, DoorDash, Plenty, Cruise, Slack, and WeWork.

To take the last one as an example, WeWork is a shared workspaces company. SoftBank, with an undisclosed percentage mix of its own money and Vision Fund funds, has put over $4 billion into the firm.

Chris Meserole, a foreign policy fellow at the Brookings Institution, stated, “If all that’s alleged is true, WeWork will be in bed with a regime that has expressed brazen disregard for virtually any norm of international politics.”

It used to be the case that costs of accepting Saudi money were fairly easy to add up in advance. The Saudis wanted a return on their investments and they wanted influence. If those were terms you were willing to accept as a business, then draw up the documents.

Fortunately, that’s changing.

The Saudis are behaving more recklessly of late. This recklessness can and should cause American firms to question whether they will be predictable and reliable business partners.

Additionally, more people are paying attention. In an era of green or local this and ethical that, it will look worse and worse for American firms to take Saudi money. Their riyal just doesn’t go as far as it used to.

Matt Cordio is co-founder and president of Skills Pipeline, a technology talent solutions company, as well as the founder of Startup Milwaukee.

The views and opinions expressed in this commentary are those of the author and do not reflect the official position of The Daily Caller.