Congressional probe digging deeper on LIV Golf fund has questions about American investments

As a congressional probe continues to dig into the financial inner workings of the Saudi Arabia Public Investment Fund, some interesting facts have surfaced on the size of the sovereign fund and its growth under governor Yasir al-Rumayyan.

On Wednesday, Sen. Richard Blumenthal, the chair of the U.S. Senate Permanent Subcommittee on Investigations, issued a subpoena to PIF’s wholly-owned U.S. subsidiary in search of documents that would pertain to PIF’s deal with the PGA Tour.

According to a memorandum from Blumenthal, D-Conn., after al-Rumayyan took control of the fund back in 2015, it grew from 40 employees to nearly 1,500 employees (as of 2021). Also, the fund now has $776 billion in assets under management, up more than five times from the $152 billion it had under its directive in 2015.

According to Blumenthal, this growth, some through holdings in American-based companies, should make the governor eligible for questioning by the subcommittee.

“The Saudi’s Public Investment Fund cannot have it both ways: if it wants to engage with the United States commercially, it must be subject to United States law and oversight,” Blumenthal said. “That oversight includes this Subcommittee’s inquiry.”

According to the memo, a move for PIF to obtain a large stake in the PGA Tour is just the latest of a series of shielded investments that should be raising eyebrows.

From the memo:

Visibility into PIF’s U.S.-based investments is greatly limited. The only information that PIF must report to the public about its U.S. investments is through required disclosures of investments in publicly-traded companies to the U.S. Securities and Exchange Commission (SEC). These disclosures show that PIF’s public U.S. holdings have increased from $2.3 billion in March 2019 to $35.5 billion in March 2023. This $35.5 billion-dollar figure does not include the disclosure of private transactions. …

This lack of visibility is troubling for a number of reasons. First, there is potential to use investment to suppress unfavorable narratives about Saudi Arabia. For example, just this week reports emerged stating that Vice Media removed an unfavorable documentary regarding Crown Prince Mohammed bin Salman after it merged with a Saudi Arabian government-owned media company. Determining whether there are connections between investment and the suppression of speech and guarding against their intended effects is impossible without knowing where and how Saudi Arabia is invested in the United States, and much of its investment is through PIF. Beyond outright suppression of potentially negative press, investment can also be used as a tool of influence to promote positive stories and thereby suppress or distract from negative ones.

PIF’s PGA Tour investment fits in this bucket because it appears to be a classic attempt at a practice known as “sportswashing,” a “phenomenon whereby political leaders use sports to appear important or legitimate on the world stage while stoking nationalism and deflecting attention from chronic social problems and human-rights woes on the home front.” More visibility about PIF’s U.S. investments is also needed to guard against efforts like this and to allow Americans to know the true source of favorable reporting.

Earlier this month, PIF retained a high-powered Washington D.C. lobbying firm to help shield Yasir Al-Rumayyan from having to speak publicly. The firm marked the sovereign fund’s pushback against the probe, insisting that some of the inquiry is subject to immunity.

In June, the PGA Tour announced groundbreaking news that it was forming a new commercial entity with the goal of unifying golf with the help of PIF.

From the PGA Tour’s release: “The parties have signed an agreement that combines PIF’s golf-related commercial businesses and rights (including LIV Golf) with the commercial businesses and rights of the PGA Tour and DP World Tour into a new, collectively owned, for-profit entity to ensure that all stakeholders benefit from a model that delivers maximum excitement and competition among the game’s best players.”

PIF was expected to make an investment into the new entity “to facilitate its growth and success” and will initially be the exclusive investor alongside the PGA Tour, LIV Golf and the DP World Tour. PIF will also have the exclusive right to further invest in the new entity, including a right of first refusal on any new capital that may be invested in the entity.