Executives testify staff could face prison if they reveal Saudi work

Senators escalated their scrutiny of Saudi Arabia’s Public Investment Fund in a hearing Tuesday before the Permanent Subcommittee on Investigations that included representatives from four consulting firms that have worked with the fund.

Executives from Boston Consulting Group, McKinsey & Company, M. Klein & Company and Teneo testified before the subcommittee on their work with the PIF and the fund’s interest in professional golf.

The subcommittee requested representatives from each of the firms to appear for a hearing in December and provide “documents and information related to their work with the PIF,” but an attorney representing PIF sent a letter to Sen. Richard Blumenthal (D-Conn.) in January arguing that providing the documents the subcommittee requested would “violate lawful orders issued by the courts of Saudi Arabia.”

The PIF was granted temporary injunctions in a Saudi Arabian court to keep the fund’s consultants from providing the information the subcommittee has requested.

“Our ability to respond in full today is not a matter of lack of desire nor our participation in national security matters,” said Michael Klein from M. Klein & Company. “We are simply limited by the ongoing litigation over our ability to share our financial analysis and documents relating to our investment banking assignments. Exposing ourselves to a breach under the filed court case with potential criminal consequences is simply not a risk I can take or impose on my employees.”

The three other consultants made similar arguments and also testified to limited connections to LIV Golf, which is owned by the PIF. Bob Sternfels, the global managing partner of McKinsey & Company, said his firm consulted with the PIF in 2021 on “potential revenues for a new golf tour,” but that work did not include LIV Golf.

All four firms declined to provide the documents and information senators have requested under the temporary injunctions, which has been challenged in Saudi Arabian court with a hearing scheduled for next month.

“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,’” Rich Lesser, the global chair of Boston Consulting Group, said. “We risk criminal and financial penalties for the firm and for individuals working or living in Saudi Arabia.”

“You say you’re between a rock and a hard place, but you’ve chosen sides,” Blumenthal said. “How is it that consulting work performed by American companies, including their work in golf, could harm Saudi Arabia’s national security?”

Sen. Ron Johnson (R-Wis.), who pushed back on the senate’s inquiry into the framework agreement that was signed in June between the PGA Tour and the PIF that set the stage for a potential partnership, supported the committee’s investigative authority.

The Tour announced last week it had reached an agreement with Strategic Sports Group (SSG), a private equity group led by Fenway Sports that invested $1.5 billion into PGA Tour Enterprises, a for-profit entity.

“I remained concerned that any Congressional oversight of the matter may do more harm than good. That said, as ranking member, I not only acknowledge but must also defend the subcommittee’s constitutional authority to investigate a broad range of issues and entities,” Johnson said.

Blumenthal, the subcommittee’s chair, asked the four executives to commit to a potential future hearing on Saudi Arabian influence in the United States.