Forbes came out with its latest billionaires list.
After the publication of the 2013 edition, Saudi Prince Alwaleed Bin Talal has informed the publication that he would no longer like to be included (thank-you-very-much) According to a press release from the Prince’s investment firm, Kingdom Holding Company, he sent a letter to Steve Forbes severing his relationship with the list. That means Forbes will no longer receive information from Kingdom about its finances.
Kingdom claims that it has discovered "what appear to be intentional biases and inconsistencies in the Forbes valuation process…"
Forbes response:
The prince first came on Forbes’ wealth-hunting radar in 1988, a year after our first Billionaires issue came out. The source: the prince himself, who contacted a FORBES reporter to let him know just how successful his Kingdom Establishment for Trading & Contracting company was–and to make clear that he belonged on the new list.
That outreach proved to be the first in what is now a quarter-century of intermittent lobbying, cajoling and threatening when it comes to his net worth listing. Of the 1,426 billionaires on our list, not one–not even the vainglorious Donald Trump–goes to greater measure to try to affect his or her ranking. In 2006 when FORBES estimated that the prince was actually worth $7 billion less than he said he was, he called me at home the day after the list was released, sounding nearly in tears. “What do you want?” he pleaded, offering up his private banker in Switzerland. “Tell me what you need.”
From the press release of Alwaleed:
Shadi Sanbar, CFO of Kingdom Holding explained, “We have worked very openly with the Forbes team over the years and have on multiple occasions pointed out problems with their methodology that need correction. However, after several years of our efforts to correct mistakes falling on deaf ears, we have decided that Forbes has no intention of improving the accuracy of their valuation of our holdings and we have made the decision to move on. KHC puts a premium on tracking the true value of our investments and it is contrary to both our practice and nature to assist in the publication of financial information we know to be false and inaccurate.”
This year Kingdom says it found four glaring errors/inconsistencies in Forbes’ reporting (from the press release):
- A sudden refusal after six years to accept share values as listed by the Tadawul – Saudi Arabia’s fully regulated, 21st century, high-tech stock exchange that services the largest economy in the Middle East and is a member of the World Federation of Exchanges.
- A completely unsupported and biased allegation based on rumors that stock manipulation “is the national sport” in Saudi Arabia because “there are no casinos.”
- The application of differing standards of proof for different individuals and organizations resulting in an arbitrary and confusing set of standards that seems demonstrably biased against the Middle East. For example, the valuations of other emerging markets such as the Mexican stock exchange are accepted while those of the Tadawul are not.
- Unexplained and purely arbitrary discounts applied to holdings not backed up by brokerage statements when pre-IPO investments such as those in Twitter and China’s 360Buy would not appear on any brokerage statement, and after impressing on Forbes that KHC’s investments are covered by confidentiality agreements.
The real killer here is at the end of the release where Kingdom says that it will continue to work with Forbes’ rival list, the Bloomberg Billionaires List, since they " use a more accurate method of calculating financial holdings."
Forbes response:
In 2006 when FORBES estimated that the prince was actually worth $7 billion less than he said he was, he called me at home the day after the list was released, sounding nearly in tears. “What do you want?” he pleaded, offering up his private banker in Switzerland. “Tell me what you need.”
The anecdotes go on. The Prince lives the life of a hard-working executive, sleeping little and expecting his staff to be on call at his 420 room palace, or his jet, or his 120 acre "farm and resort" at all times. Dolan says he’s trying to live up to the legacy of his family, the founders of Saudi Arabia and leaders of Lebanon.
And it’s not that he hasn’t had his successes in business. Alwaleed got his start making massive bet on Citi:
As regulators pressured Citicorp to increase its capital base in the face of bad loans across developing countries, Alwaleed, then unknown outside Saudi Arabia, amassed an $800 million position. That enormous bet ballooned across two Wall Street boom cycles–by 2005 it was worth $10 billion, making Alwaleed, at the time, one of the ten richest people in the world, and earning him a nickname, which he encouraged, of “the Buffett of Arabia.”
The problem, Dolan writes (pulling absolutely no punches) is that Kingdom Holding’s underlying assets do not add up to its own reported value. The Prince, she claims, is using his own personal fortune to boost the company in order to maintain his image.
…Kingdom Holding shares began what seemed a miraculous rebound in early 2010, rising 57% in the ten weeks prior to the February date that FORBES used to lock in values for that year’s Billionaires list, as Citigroup shares fell about 20%. The prince’s ranking on the FORBES billionaires list surged in lockstep to 19th ($19.4 billion).
In 2011 the pattern repeated. In the ten weeks before FORBES locked down its list, Kingdom Holding shares rose 31% while the Saudi index was up 3% and the S&P 500 was up 9% over that same period. (Prince Alwaleed finished at No. 26 in the world that year, with an estimated net worth of $19.6 billion.) It happened yet again in 2012, when Kingdom shares climbed 56% while the Saudi market was up just 11%, and the S&P 500 was up 9%. (This time Alwaleed was No. 29, with an $18 billion valuation, after FORBES discounted his claims on many of his non-Kingdom Holding assets.)
In this year’s calculations, Forbes said it could not justify Kingdom’s estimation of Alwaleed’s wealth and that the gap between their estimates and his is about $9.6 billion.
Brutal.
Forbes responded to these allegations in an e-mail to Business Insider saying, "Prince Alwaleed has issued a press release in response to fact-checking questions from Forbes. For our 27th annual Billionaires ranking, released today, Forbes has listed Alwaleed at $20 billion, which is $2 billion more than what he was listed at last year but $9.6 billion less than he claims he is worth. Forbes has been investigating the prince’s finances for several years, and will detail its findings in a feature story in the magazine, which will be released online tomorrow morning."
