February 7, 2024 – 3:21 PM PST
As a U.S. Senate committee investigates the possibility of a PGA Tour merger with LIV Golf, bankers and consultants who advise Saudi Arabia’s Public Investment Fund have testified that they face “criminal and financial penalties” if they cooperate with the probe.
According to a report by Bloomberg News, the PIF sued its advisers in a Saudi court last November preventing them from sharing information with the U.S. Senate committee on homeland security and governmental affairs.
In Washington this week, banker Michael Klein and representatives of consulting firms McKinsey, Boston Consulting Group (BCG) and Teneo Strategy faced lawmakers and pled their case for not cooperating.
“The PIF has been explicit that the disclosure of information relating to BCG’s work for PIF is a violation of Saudi law, which ‘imposes criminal penalties for disclosing or disseminating such information including imprisonment for a maximum of 20 years,'” BCG’s Rich Lesser said in prepared testimony. “We risk criminal and financial penalties for the firm and for individuals working or living in Saudi Arabia.”
That includes 20-year prison sentences for executives and staff working in Saudi Arabia, Klein said.
“This represents aberrant behavior for a client, and, quite frankly, for the PIF, who has historically been a client that has operated with best practices of governance with us,” Klein said at a hearing.
The executives added that they are fighting the PIF’s lawsuit, Bloomberg reported. They claimed they are attempting to reduce the number of redactions in their documents submitted to the Senate panel. Most of BCG’s 91-page document submission, for example, was calendar invitations with every attendee’s name redacted.
Last June the PGA Tour announced the “framework agreement” for a shock merger with the PIF, which funds new rival league LIV Golf, as well as with the DP World Tour. While the PGA Tour has taken on a news investment partner made up of U.S.-based sports ownership groups, called Strategic Sports Group, it is said to still be in negotiations with the PIF.
It remains to be seen if the PGA merging with its only rival will be allowed under federal antitrust law.
The consulting groups’ hesitance to work with the panel upset Sen. Richard Blumenthal (D-Conn.).
“It’s simply staggering to me that American companies are not only willing to accept this claim, allowing the Saudi government to determine what is permitted to provide this subcommittee — but also that they would use it to justify their refusal to comply with a duly issued congressional subpoena,” Blumenthal said.
In a statement to Bloomberg, the PIF said it was making “significant efforts to facilitate the production of requested information from our advisers consistent with the laws of Saudi Arabia, which should be recognized like those of any other country.”
–Field Level Media