Despite UK Government withdrawal consultancies back Saudi event

Political figures such as UK International Trade Secretary Liam Fox, and a long list of the big beasts of the business world have withdrawn support for the Future Investment Initiative being hosted in Saudi Arabia, after the Saudi government allegedly disappeared an oppositional journalist in October. However, a number of heavyweight consulting firms remain reluctant to take a stance on the matter, fearing a loss of business across the Middle East.

The Future Investment Initiative (FII) currently taking place in Riyadh, Saudi Arabia, is the second annual incarnation of an event designed to set out the Kingdom’s stall as a regional power in transition. The alleged modernisation of the historically conservative autocratic regime had been met with global fan-fare, with businesses, consultants and even a former British Prime Minister extolling the apparent virtues of Crown Prince Mohammed bin Salman’s Vision 2030 reforms – including allowing Saudi citizens to attend cinema screenings, and allowing women to drive – and the FII had premiered last year to illustrate the Kingdom’s changing image and to encourage international investment.

However, the second annual event, which was set to feature 150 speakers from 140 organisations has been dogged by a clash between the presented image of Saudi Arabia, and the reality that its incumbent regime has continued to deliver. While a continued campaign of bombing in Yemen has wrought famine on some 13 million people, and the supposed advances for women’s rights in the nation have often occurred in parallel to crackdowns on human rights activists in the region, the three-day event organised by Saudi Arabia's sovereign wealth fund had been unaffected until early October. Now, however, the event takes place in the shadow of the alleged assassination of  government critic and Washington Post journalist Jamal Khashoggi.

Khashoggi vanished on October 2nd, while visiting the Saudi consulate in Istanbul. Turkish authorities say he was killed in the building by Saudi agents, using the opportunity to erase a fierce critic of the country’s regime. Though Saudi Arabia has dismissed the accusation as "lies", the murder accusations have rocked the FII, and those no longer attending the unofficially named ‘Davos in the Desert’ (a self-styling which the World Economic Foundation has railed against) include the Chief Executives of HSBC, JPMorgan Chase, Standard Chartered, the London Stock Exchange, Credit Suisse, BlackRock and Société Générale, as well as the Chairs of Blackstone and BNP Paribas.

In a further blow to the event’s credibility, and Saudi Arabia’s public relations efforts, Liam Fox, UK International Trade Secretary; Steve Mnuchin, the US Treasury Secretary; Christine Lagarde, Managing Director of the International Monetary Fund, and a glittering line-up of finance superstars have also announced they will no longer attend. These include the CEO of Uber, Dara Khosrowshahi; Chairman of Ford Motor Company, Bill Ford; and Richard Branson, the founder of Virgin Group. Even Goldman Sachs, routinely criticised publically for its ethical shortcomings, has said none of its executives will be there, though the BBC reported that the firm will still be sending a small number of attendees.

Consulting industry's involvement

However, while German-origin consultancy Roland Berger, which is also sponsoring the event, said it was reviewing its position, the consulting industry as a whole is largely still behind the event. Despite growing international condemnation, among the consulting firms still understood to be involved as sponsors are three of the Big Four, PwC, EY, Deloitte; the Big Three of strategy consulting, McKinsey & Company, the Boston Consulting Group and Bain & Company; Marsh McLennan-owned Oliver Wyman; and research company SWFI.

With the likes of Patrice Caine, CEO of Thales and Jean-Bernard Levy, CEO of EDF, still scheduled to attend, the event is still seen as an opportunity for firms to build relationships and secure lucrative contracts in the Kingdom. The consultancies in question have already put significant resources into fostering these relations, as well, meaning they may simply regard the Kingdom’s reputation for human rights abuses as a lesser factor than the profits they would forfeit, should they withdraw.

McKinsey in particular has spent recent year building strong ties with the Saudi monarchy, even employing a number of the royal family and its officials. BCG was tapped to help the government open up Saudi Arabia’s cinema system to the public, while PwC UK was recently discovered to be courting the Kingdom for a major governmental defence contract. These examples are just a few of the many illustrations of the consulting industry’s level of investment in the Saudi regime’s image transformation project.

At the same time, pulling out of the FII event does not only raise the risk of losing future business with Saudi Arabia. It also risks antagonising the Kingdom’s allies. Bahrain’s foreign minister has already started a ‘boycott Uber’ campaign in protest at its CEO’s decision not to attend the event, while similar campaigns are being mooted in the United Arab Emirates.

Perhaps the biggest concern among business leaders regarding action on the matter of the FII may well be that it is an arena they are unused to. Historically it was left to national governments to express displeasure at the actions of others via official diplomatic channels. In a new age of instant information, where consumers are increasingly expecting capitalists to demonstrate responsibility themselves, however, business leaders must also outline clear stances on the matter of international politics.

Embodying a business world which is still struggling to adapt to this new order, a spokesperson for the Confederation of British Industry said it was up to individual companies to "look at the situation carefully and make their own judgments".

However, SNP MP Angus MacNeil, the Chair of the International Trade Select Committee, expressed support for further boycotts, stating, "The behaviour of Saudi Arabia is utterly beyond the pale. They cannot operate with such savage impunity."

Human rights charity Amnesty International has also said businesses should "think twice" about attending. Amnesty's Economic Affairs Programme Director Peter Frankental told the press that corporations should consider that it might damage their brands to be associated with a country that "bombs civilian targets in Yemen, imprisons human rights defenders and apparently disappears a journalist overseas."

Related: Saudi Arabia a lucrative battleground for management consultants.