Saudis Plan to Reap Billions for State in Crackdown on Wealthy Princes

Finance Minister Mohammed al-Jadaan said funds could be used for education and health care

RIYADH, Saudi Arabia—Saudi Crown Prince Mohammed bin Salman wants to take from the rich and give to the state.

The kingdom plans to inject billions of dollars it recovers from a sweeping corruption probe into its state budget, its finance minister said, as it rolls out an expensive plan to reshape its oil-dependent economy.

Saudi officials have suggested corruption cases against hundreds of wealthy princes, top officials and businessmen in recent months could net at least $100 billion, although some people familiar with the matter have said recoveries could be far higher.

“Whatever is going to be recovered will go to the treasury because it was taken from the treasury,” Mohammed al-Jadaan said in an interview late Tuesday with The Wall Street Journal, though he gave no specifics. “And then it will be used obviously in the years to come, whatever is coming, as part of the budget allocation.”

The crackdown is widely perceived in a positive light within Saudi Arabia, where many people grate at what they see as rampant corruption within a class of wealthy elites. Moves like the ongoing crackdown have helped burnish Prince Mohammed’s popular image as a champion of fairness, despite the fact that he and his father preside over an opaque, monarchical political system.

Significant recoveries could support costly economic reforms spearheaded by Prince Mohammed, which include tens of billions of dollars in stimulus for the private sector and allowances for less-well-off Saudi families as part of a grand plan to wean the country off of oil revenues, while easing the pain of the transition for ordinary Saudi citizens.

The recovered funds could give a boost to education and health-care spending, Mr. Jadaan said.

Among the people caught up in the crackdown are Prince al-Waleed bin Talal, a multibillionaire investor in Twitter, Lyft and Citigroup, and Bakr Bin Laden, the chairman of the Jeddah-based Saudi Binladin Group, one of the kingdom’s largest construction companies. Representatives of the men didn’t return requests for comment.

Several of the people detained in the crackdown were released last month, including the influential Prince Miteb bin Abdullah, a sign that some of the accused were reaching settlements with the government.

But Mr. Jadaan cautioned that the corruption inquiry was still in its early stages, and it wasn’t clear when recoveries would start flowing into the state treasury. The government wasn’t planning for any recovered money in its 2018 budget, he said.

“Those who don’t want to settle will go to court, and that’s also a few years down the road,” he said. “So it will take time.”

The country on Tuesday unveiled unprecedented spending of $260 billion in next year’s government budget, including $10.7 billion allocated to an allowance for poorer households, $51 billion to education and $39 billion to health and social development.

There has also been speculation that some of the recovered assets could wind up under the Public Investment Fund, Saudi Arabia’s main sovereign wealth fund. The PIF didn’t immediately respond to a request for comment.

Successive waves of arrests of top Saudi business figures has shaken the local business community and added to perceptions of risk for foreign investors the kingdom has been courting. Saudi officials argue the moves are positive for foreign investors because ridding the system of corruption creates a more level playing-field.

“Hopefully this over the long term will attract more investors, even foreign investors,” Majed al-Qasabi, Saudi Arabia’s Minister of Commerce and Investment, said Wednesday.

Many analysts and observers outside the kingdom also see the corruption crackdown as part of a centralization of power in the hands of Prince Mohammed. Prince Mohammed, who is 32 years old, has rapidly risen within Saudi Arabia’s royal family. He became next in line to the throne this summer.

Despite its rise in outlays in the 2018 budget, the kingdom hopes to narrow its budget deficit to 7.3% of its gross domestic product next year, from 8.9% of GDP this year.

That fiscal maneuverability has come thanks mainly to elevated oil prices. Oil, which provides the lion’s share of government revenues, is trading at around $60 a barrel, more than double its price at the beginning of 2016.