Larger than life

Plummeting stock prices have done nothing to dampen the enthusiasm of Prince Alwaleed bin Talal Al Saud. Arabian Business spends a day with a larger than life prince.

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By  Massoud Derhally Published  November 10, 2002

|~||~||~|You can’t help but feel the raw energy that surrounds Prince Alwaleed bin Talal bin Abdulaziz Al Saud. You feel it when you are around him; you sense it when you interact with his team, it gets your adrenaline going and there is, without a doubt, a rush.

At 45 years of age, the winner of the 2002 Arabian Business Lifetime Achievement Award (see following feature) is still a man constantly on the move and his presence demands your undivided attention. If you watch him closely, you might conclude that if he could, he would go without sleeping. As chairman of the Kingdom Holding Company and by virtue of his investments, estimated to be worth US $20 billion, Alwaleed is the wealthiest businessman outside the US. As a global investor, CEOs and money managers worldwide follow the prince’s moves closely, especially in the turbulent market conditions of the past two years.

If you ask him about the parameters he uses today to guide his investment strategy, the prince may very well surprise you. “To be honest with you, the last two years have proven one thing. You can think of good companies or bad companies [that are] good in their industry, and are a dominant force, but everything will boil down to one main subject — what is your entry price,” says the prince.
“Those investors that invested in internet companies at, let’s say, a price of $150, $160 or $180 and the price went down to $3, these people were wiped out. But let’s say another investor went in at $2 and the price went from $150 to three, he did not lose much. I think what this tells us is that an investor has to be very thorough and do his homework. He should always look at things the old fashioned way: look at the price-earning ratio, the dividend yield and the owners of the company, and not only the income statement and balance sheet. I think the old fashioned way is coming back; the hoopla is fading now,” he adds.

The prince also has strong views on the scandals that have rocked corporate America. Alwaleed says you have to put WorldCom, Arthur Andersen, Enron and Tyco in one basket. “These are four companies; you cannot come to the conclusion that all corporate America is rotten and corrupt. Actually, this is a good indication that the rest are not that bad. But unfortunately the media will take these four companies and say all of corporate America is corrupt, and that is not correct at all,” he says. “Corporate governance [however] definitely should be pursued more aggressively and intensively, no doubt about that.”

You would think the entire team that travels with the prince would be irritable and short tempered. They’re not. In fact, they are patient, alert and hilariously funny. They make cracks as to how many hours of sleep they got the night before and while the prince’s schedule is busy and intense the atmosphere around him is certainly not tense. At 8:30 am on October 28, the first day of the Dubai Strategy Forum, which the prince was attending, everyone was gathered at his suite in the Fairmont hotel.

From the moment he set foot outside, we were on the go. There was no stopping. We left the hotel in five black Mercedes to attend the forum, which was being held under the patronage of HH Sheikh Mohammed bin Rashid Al Maktoum. At mid-day, the prince held a press conference to announce an agreement between his Kingdom Hotel Investment (KHI) Group and Omnix International to invest US $19 million in the $82 million Movenpick Dubai Pearl Hotel to be built at Dubai Media City.
Hotel and real estate holdings have gradually become an increasingly important part of the prince’s portfolio. According to Sarmad Zok, CEO of Kingdom Hotel Investment, which owns 13 properties across the Middle East, “KHI accounts directly or indirectly for over $1 billion in real estate investments.” After the announcement, the prince opened the floor to questions from journalists, who were all clamouring to talk to him.
It was incredible to watch him in action. The harder the question, the more enthusiastic he was about answering it. One of his aides turned and said, “With the prince, challenge is his life.” When asked by a journalist how he felt about the technology sector the prince pulled no punches: “I see no light at the end of the tunnel.” The prince has invested heavily in tech.

While we didn’t speak about exactly how much he has lost or made since the market correction of March 2000, we did speak about tech in general and about the internet in the Arab world. “By definition, internet means openness, it means unlimited access anywhere, any time, wherever you want to go,” says Prince Alwaleed. “Unfortunately many Arab countries have restrictions and it’s limiting the growth. Arabia Online [in which he has a large stake] is clearly facing this difficulty; they expected growth to be a lot more substantial than what it is right now. But because of the global slowdown and Arab governments putting up obstacles and hindrances this has caused more problems for the growth of all internet companies in the Arab world and specifically Arabia Online. They are defeating the purpose of the internet, which is complete openness.”

As to any attack on Iraq and how that would impact oil prices, Alwaleed said the price of oil would shoot up and then decline. One journalist stood up and said what have you given to the Palestinians? The prince smiled and said, “Why don’t you call Yasser Arafat and ask him how much I have given.”

After leaving the forum, we went to the nearby palace of HH Sheikh Sultan bin Khalifa bin Zayed Al Nahyan. While the prince and some of his men took a tour of Dubai by helicopter, the rest of us went to the palace to relax a little. One of Alwaleed’s men was pacing the room on his phone, negotiating a deal, while some of us were busy talking and drinking tea and others were praying. As we chatted, one of the prince’s men said, “You know, when the prince moves, the whole office moves with him.”

No matter where Alwaleed travels, he has to be plugged in. The prince stays on top of what’s happening around the world in a number of ways. “Telephone and television are two things he cannot live without, especially CNBC. Even where something doesn’t exist, we have to make it exist and that includes when we go to the desert,” he added. American and European papers are printed every day via Newspaper Direct, and throughout the day he is on the phone talking to his financial advisors, consultants, world leaders and personal friends.

After 45 minutes out in the helicopter, the prince landed and the second tour of Dubai was about to begin. The prince turned and said, “Where are we going? I don’t want to go back to the hotel.” So off we raced to another property in Dubai, which the prince wanted to inspect as he was thinking about turning it into a Movenpick Hotel. Once we arrived he proceeded to scour the entire hotel, starting with the men’s room, which he said, “was very important.” After the hotel tour was finished, it was time for lunch and towards Burj Al Arab.

Over lunch at the Al Muntaha restaurant, which has a spectacular view of the emerging Palm Island, the prince continued to talk business. While things quieted down, there was talk about possibly bringing a Four Seasons hotel to the Middle East, and later at dinner the prince had said that if things work out this would be a “home run.” After lunch, we went down to the 780 square metre royal suite on the 25th floor, which resembled the inside of what could be a rock star’s home. It costs Dhs 25,000 a night to stay in the suite. Everyone gathered around in the majlis on the second floor of the suite. It was extremely informal and relaxed. The prince has a lively sense of humour, and it not only infects those around him, but also puts people at ease.
Alwaleed is not only a businessman but also a philanthropist. He recently stepped in to help the families of victims of a train that had derailed in Egypt and did the same when a dam burst and flooded an entire village in Syria earlier this year. The Palestinians have also received a great amount of support, both moral and financial. In fact, while we were in the majlis, the prince placed a call to Palestinian President Yasser Arafat, to see how he was doing and what the latest developments were. “Sharon is not interested in peace; we know that,” he told Arafat.

Asked whether he has considered setting up a fund to establish a public relations presence in the US to convey the Arab position, the prince says, “Unfortunately, the Arab media and the Arab ministers of information are going in the wrong direction. In America, you have to go and talk to the public, to the people. You have to go to the grassroots, not only talk to the politicians; you have to talk to people in the street in Tennessee, Milwaukee, New York, Washington, and Los Angeles.”

“There has to be a campaign to talk to and infiltrate all these people, and tell them who we are as Muslims and Arabs and why the perception of us is wrong. It’s not enough to go and have an article, or an advertisement. If we are able to convince those people, they can then go and influence those senators, and I don’t see an indication at this stage that the ministers of information have diagnosed this problem yet.”

There is no doubt that the terrorist attacks that took place in New York and Washington in September 2001 changed the world. More importantly, they changed US-Saudi relations. Prince Alwaleed is aware of the strain on the relationship and has tried to build bridges between the two countries, making it known that Saudi-American relations are vital, strategic and built on a legacy of shared interests.

The episode of Mayor Guliani rejecting the prince’s $10 million cheque because he called on America to address the Palestinian-Israeli conflict still lingers. The prince speaks his mind, and he encourages others to do the same. “For anyone to say that things between Saudi Arabia and the US are as normal as they were before 9-11, they are dreaming,” he says. “The event that took place is tremendous, horrendous and grave. America was wounded in the heart of its economy, of its finance, commerce and trade and both administrations know this and acknowledge this between themselves. The best indication of that is Crown Prince Abdullah’s continuous dialogue with President Bush and his administration.”
Alwaleed also believes that the media is not playing the role the US administration is playing, which he describes as positive. “I think the US administration is saying ‘Ok, you have 15 terrorists, they are Saudis but we will not generalise all Saudis. [However,] the media has been pushed very intensively and aggressively by the rightist Jewish lobby, which is really trying to capitalise on this to ruin the friendship between Saudi Arabia and the US,” said the prince. “Although the relationship between the US and Saudi Arabia is excellent, it is not as good as it was before. There is a wound and this wound is pretty deep. It’s going to take time to heal and return to normal.”

With all eyes on Bahrain’s experiment with democracy, the media has been waiting to see how Saudi Arabia might react to developments in the small Kingdom. The prince felt it was premature to pass judgement on Bahrain’s experiment with democracy. “It’s too early; when elections have just taken place two weeks ago you can’t judge if it is a success or failure.” As to how the recent developments might affect the Kingdom, the prince said, “If you are implying what are the ramifications on Saudi Arabia and other countries, I think each country has its own unique particulars: society, culture and history. Whether it is successful or not successful, and I hope it is successful, it should really be contained to Bahrain.”

Alwaleed is very big on retail and loves malls. His biggest project in Saudi Arabia is Kingdom Centre, which is 300 meters tall, the same height as the Eiffel Tower, and has the first Saks Fifth Avenue outlet in the region. After leaving the Burj Al Arab, we zoomed down the Sheikh Zayed road to the upscale Wafi City and Bur Juman malls as the prince wanted to get an idea of the mall culture in Dubai and to have a look at the emirate’s retail environment.

After strolling around casually for a while, it was time for Alwaleed to do what he does every day: take his walk, and he loves to walk fast. We headed to Deira, the old commercial centre of Dubai. As we got out of the car, one of his men turned and said, “I hope you have walking shoes.”
The prince, who is the grandson of Saudi Arabia’s founder, King Abdulaziz Al Saud and nephew of Saudi Arabia’s current ruler, King Fahad bin Abdulaziz, and of Crown Prince Abdullah bin Abdulaziz, just took off. He walked as an ordinary man would in the streets of Deira by the creek, stopping casually to look at a white GMC limousine and then, later on, walking into a grocery shop, which gave the eight of us accompanying him the opportunity to quench our thirst. “He likes to milk every second of the day,” says one of his close advisors.
After the two hour walk, it was time for dinner and we headed to the Royal Mirage Hotel. We finished a sit down interview and then went down to the Celebrities restaurant, at which point I mentioned the hotel had an incredible Moroccan restaurant. The prince turned smiling and said, “It’s closed, otherwise we would be there.” The prince loved the hotel and the landscape. A devout Muslim, he gets up early every morning to pray. Responding to a comment at the dinner table about it being ok if you woke up late and missed the Morning Prayer, the prince said, “You can b***s*** people, but you can’t b***s*** God.”

The prince is a hands on kind of man, so after dinner we went back to the venue of the forum. At 1:00 am, Alwaleed was testing the tele-prompter for his speech the next morning. After a good 40 minutes, it was back to the Fairmont where the prince had yet another meeting with a prominent Dubai businessman. The next morning, Prince Alwaleed gave a speech about “growth through partnerships in the region and beyond, and about harnessing the power of partnerships to compete in the global economy.” He then turned to speak about the state of economies in the Arab world, which he characterised as being in a “malaise” and which he said at best “generated anaemic growth.”

The prince’s speech was hard hitting stuff. It pointed out that leaders need to do more than talk. Alwaleed is a doer, unlike many others who are not. When we had our interview and the subject of economic reform in Saudi Arabia came up he was frank. “Saudi Arabia has reached a stage whereby it has diagnosed the problems very clearly. The issues and the problems, whether they are economical, financial or social, have been defined very well. As for the remedy and as for the issue of rectifying all these matters, things are moving but not up to the level we are expecting,” said Alwaleed.
“You have to understand that Saudi Arabia, like any other government, has bureaucracy that is well entrenched, but the most important thing is that right now Saudi Arabia is permitting open dialogue and discussion. I believe that eventually the public, by getting to know about the problems in a more open manner, will exert pressure on the bureaucracy and the government to rectify the situation as quickly as possible. The problem has been diagnosed but the remedy is not being applied as fast as it should be. Clearly, if you look at the foreign investment that has come to Saudi Arabia in the last two to three years, relative to the size of the Saudi economy it is negligible, minute and really unacceptable.”

Around one year ago, former President Clinton recommended to a group of Saudi businessmen that Saudi Arabia invest in the broader energy sector, as opposed to just oil, as a way of diversifying its economy. Clinton had suggested the Kingdom look at developing the area of solar energy through investments. It is certainly an interesting concept. However, the prince believes that solar energy is still at an early stage of development. “Once it becomes well developed and economically feasible, I don’t think the West will hesitate one minute to utilise it,” he says. “But clearly I am against it and I hope it doesn’t work because I would still like the Western world to depend on oil. But the way I interpret it, solar energy is still in its infancy.”

After visiting the Rashid Paediatric Centre, to which the prince contributed Dhs 2 million, we raced to the airport where Prince Alwaleed and his team boarded an Airbus 340 back to Saudi Arabia. It was a fascinating day and a half with a man from whom many in the Arab world could learn a lot.||**||

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