JUNE 1980 - VOLUME 1 - NUMBER 5
Saudis Reign In Corporations
Saudi Arabia over the past decade has been a playpen for foreign corporate antics, Lockheed's $100 million-plus bribes being only the most sensational.
However. in recent months, the Saudi government has become increasingly concerned over evidence of official involvement in corporate bribery, as well as other signs of Saudi weakness in the face of unassisted corporate malfeasance.
A crackdown commenced in earnest in April when the Saudi government sentenced the Hyundai Construction Company for attempted bribery. Hyundai, part of South Korea's largest conglomerate and the fourth-ranking construction firm in the world, was caught red-handed in, an $8 million bribe last August. Reacting with unprecedented severity, the Saudi government slapped a record $90 million fine on Hyundai, and has banned it from bidding on any new contracts until December, 1981. An official Saudi decree, issued April 29 after months of silence, pronounced that Hyundai has "offended the national interests of the Kingdom."
Less than a month later, the government-owned Saline Water Conversion Corporation dismissed all four multinational construction companies-IHC and C. Itoh of Japan; Waagner Biro of West Germany and Technic of France-bidding on a desalination project. The reason for the action: suspected fee-padding and collusive price-fixing.
According to Middle East business reports and U.S. government officials, the Saudi campaign stems from the Royal Family's. growing fear of social upheaval. The Saudi government, jarred by the seizure of the Grand Mosque in Mecca by ,.;Islamic fundamentalists, is taking highly visible actions to forestall further erosion of its support.
One U.S. Commerce Department official, recently back from the Kingdom, noted that the Mosque incident has had "a tremendous ripple effect which extended to corporate practices."