{"id":212676,"date":"2024-02-06T11:15:09","date_gmt":"2024-02-06T11:15:09","guid":{"rendered":"https:\/\/www.livemintnewstoday.com\/top-us-consultancies-face-scrutiny-over-role-in-saudi-arabias-sports-push\/"},"modified":"2024-02-06T11:15:09","modified_gmt":"2024-02-06T11:15:09","slug":"top-us-consultancies-face-scrutiny-over-role-in-saudi-arabias-sports-push","status":"publish","type":"post","link":"https:\/\/www.livemintnewstoday.com\/top-us-consultancies-face-scrutiny-over-role-in-saudi-arabias-sports-push\/","title":{"rendered":"Top US consultancies face scrutiny over role in Saudi Arabia\u2019s sports push"},"content":{"rendered":"

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Major US consultancies who have advised Saudi Arabia<\/a> on its global sports spending spree \u2013 including its proposed takeover of golf\u2019s PGA Tour<\/a> \u2013 are coming under fire in Washington for possible violations of federal disclosure laws.<\/p>\n

Four prominent consulting firms, including McKinsey, have been accused of refusing to fully comply with subpoenas for information about their work for the oil-rich kingdom by the Senate permanent subcommittee on investigations. The Senate panel has been conducting an inquiry into authoritarian governments\u2019 efforts to deploy<\/a> soft power and other influence strategies in the US.<\/p>\n

So far, the consultancies have only provided information of \u201climited substantive value\u201d, according to a memo released to the media by the committee\u2019s Democratic chairman, Richard Blumenthal.<\/p>\n

But in a more serious turn of events for three of the firms, the senator has also strongly suggested that the consultancies could be violating federal disclosure rules<\/a> \u2013 known as the Foreign Agents Registration Act (Fara) \u2013 by not formally declaring to US authorities that they are acting as agents of the Saudi government.<\/p>\n

Failure to file under Fara, which was designed to control illegal foreign influence over the US government, is considered a federal crime and can lead to hundreds of thousands of dollars in fines or imprisonment.<\/p>\n

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The Saudi public investment fund (PIF), a sovereign wealth fund chaired by the crown prince and de facto Saudi leader, Mohammed bin Salman, and is worth an estimated $776bn, is at the heart of Blumenthal\u2019s inquiry.<\/p>\n

The PIF controls major investments around the world, including the 2021 takeover of the British football club Newcastle United<\/a>, and has made major investments in the US, including in Meta, JP Morgan Chase, Starbucks, Microsoft, Lucid Motors, Activision Blizzard, Electronic Arts, Live Nation Entertainment and Uber.<\/p>\n

The PIF also owns stakes in US private equity and venture capital firms including Blackstone, General Atlantic, KKR, Hellman & Friedman, Apollo, Brookfield and CVC.<\/p>\n

The PIF has routinely objected to being subjected to US laws and has rebuffed repeated requests by the Senate committee to hand over documents subpoenaed by the panel. To get around the issue, Blumenthal looked to gather information from the US consultancies that have advised Saudi Arabia<\/a> for answers.<\/p>\n

The Saudi government responded by issuing an injunction against the consultancies in the Saudi courts, claiming that the records sought by the committee are classified and that their release could harm Saudi national security interests. The consultancies affected include Boston Consulting Group, McKinsey & Company, M Klein & Company, and Teneo, which are all headquartered in the US.<\/p>\n

\u201cAccepting the PIF Consultants\u2019 refusal to cooperate with this Subcommittee would create a dangerous and unsupportable precedent \u2013 that American companies can shield commercial interactions with foreign governments that are directed towards the United States from oversight simply by choosing to have their contracts governed by foreign law,\u201d Blumenthal said.<\/p>\n

The Saudi government\u2019s insistence that the US consultancies working for the PIF be treated as \u201cpublic employees of the government of Saudi Arabia\u201d has put the consultancies at legal risk. Under US law, any individual working as an agent of a foreign government must comply with Fara, which only one of the consultancies \u2013 Teneo \u2013 has so far done.<\/p>\n

Blumenthal said in a memo that a key question for the panel\u2019s inquiry was assessing whether Fara would apply to the consultancies.<\/p>\n

In a statement to the Guardian, a spokesperson for McKinsey, which has faced substantial criticism<\/a> for its work for Saudi Arabia in the past, pushed back on the Saudi government\u2019s claim.<\/p>\n

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