Saudi Arabia’s investment conference was supposed to strengthen ties between the international business community and Crown Prince Mohammed bin Salman and his country’s massive wealth.
Instead, the death of dissident Saudi journalist Jamal Khashoggi at his country’s consulate in Turkey earlier this month has thrown companies and governments into a public-relations quandary that has no clear solution.
Leading up to the Future Investment Initiative conference in Riyadh this week, executives from JPMorgan Chase & Co., Uber, Blackstone Group and other companies cancelled plans to attend the event.
But as international condemnation grows over the Saudi government’s alleged involvement in Mr. Khashoggi’s death, businesses are under pressure to do more to distance themselves.
But it is not as simple as returning Saudi funds or severing ties with the kingdom, where the Crown Prince is suspected of having played a role in the murder plot.
“It is not black or white,” said Richard Leblanc, corporate-governance professor at York University. “I believe the answer is ‘grey,’ where companies do business with the Saudi Arabia government, but have environmental, diversity and human rights as conditions of doing business.”
Canada is struggling with how to send Saudi Arabia a strong message. Although the Saudi government cut off new investment and trade ties with Canada in the summer, to protest criticisms of by the Trudeau government of Saudi human rights, But the Prime Minister said this week it would cost as much as $1-billion to cancel or suspend an armoured-vehicle deal with the kingdom.
“Isolationism is not the answer, nor is blind acceptance of atrocious human-right records. The answer is influence and leverage in my mind,” Mr. Leblanc said.
Companies such as WeWork, Uber, Four Seasons Hotels Ltd. and SoftBank Group Corp. are faced trying to with maintain a positive reputation while benefiting from Saudi investment.
SoftBank in particular has a lot to lose. Saudi’s sovereign wealth fund has provided nearly half the capital for SoftBank’s US$100-billion Vision Fund and has promised to invest a similar amount in the Japanese company’s second fund.
Although SoftBank chief executive Masayoshi Son did not attend the conference, it is unclear how he will move forward with the Saudi government.
“The companies that are taking those actions are wanting clearly to distance themselves from unethical behavoiur,” said Christie Stephenson, executive director with the Dhillon Centre for Business Ethics at UBC Sauder. “That is a starting point. Taking a stand needs to be followed by action,” she said.
SoftBank’s Vision Fund has invested heavily in tech companies such as Uber and WeWork, which have positioned themselves as ethical corporations.
One company that has suspended business relations with the kingdom has been Virgin Group. Its founder, Richard Branson, halted director positions in two Saudi tourism projects, as well as discussions with the country’s sovereign wealth fund. He has warned that if the allegations against the Saudi government are proven, it would change the ability of anyone in the West to do business with the Saudi government.
“There is more demand on companies to be ethical and think about how they are run, how they are impacting society with what they sell, who they sell to and who they employ,” UBC’s Ms. Stephenson said.
Mr. Khashoggi, a Washington Post columnist who had become increasingly critical of the crown prince, was last seen in public entering the Saudi consulate in Istanbul Oct. 2.
Since then, the Saudi government has changed its story on his whereabouts, first saying Mr. Khashoggi left the consulate and then admitting he was killed by Saudis in what was described as an interrogation gone wrong. At the business forum on Wednesday, Prince Mohammed called the dissident’s murder a “heinous crime” and vowed that justice would be served.
Uber did not respond to a request for comment. WeWork and Four Seasons declined to comment.