Saudi Arabia has reportedly threatened to jail bankers and consultants it works with if they cooperate with the US Senate investigation into the proposed merger of the PGA Tour and LIV Golf.
As negotiations continue between the Tour and LIV’s backers, the Saudi Public Investment Fund, the US Senate committee continues its investigation into the merger of golf’s two previously warring parties.
However, as the commission conducts its investigation, bankers and consultants advising PIF have said they will face “criminal and financial sanctions” if they cooperate.
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 US Senate Committee on Homeland Security and Government Affairs.
This week, banker Michael Klein and representatives from consulting firms McKinsey, Boston Consulting Group (BCG) and Teneo Strategy faced lawmakers in Washington and made their case for non-cooperation.
Yasir Al-Rumayyan, the governor of the Saudi Public Investment Fund, the financiers of LIV Gold
BCG’s Rich Lesser testified that the bankers face criminal and financial penalties for the company
‘The PIF has explicitly stated 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 prison sentences of up to twenty years’ , said BCG’s Rich Lesser. said in prepared testimony. “We risk criminal and financial sanctions against the company and against 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 deviant behavior for a client, and, quite frankly, for the PIF, which has historically been a client that has worked with us under best governance practices,” Klein said at a hearing.
The executives added that they are contesting the PIF’s lawsuit, Bloomberg reported. They claimed they are trying to reduce the number of redactions in their documents submitted to the Senate panel. For example, the majority of BCG’s 91-page document submissions consisted of calendar invitations with each participant’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, and the DP World Tour.
Although the PGA Tour has hired a news investment partner made up of US-based sports ownership groups called Strategic Sports Group, it is said to still be in negotiations with the PIF.
The advisory groups’ reluctance to work with the panel upset Senator Richard Blumenthal
It remains to be seen whether the PGA’s merger with its only rival will be allowed under federal antitrust law.
The advisory groups’ reluctance to work with the panel upset Sen. Richard Blumenthal (D-Conn.).
“It is simply mind-boggling to me that American companies are not only willing to accept this claim, allowing the Saudi government to determine what may be granted to this subcommittee – but also that they would use it to justify their refusal to comply a duly issued order. subpoena from Congress,” Blumenthal said.
In a statement to Bloomberg, the PIF said it is “making significant efforts to facilitate the production of the requested information from our advisors, in accordance with the laws of Saudi Arabia, which must be recognized as those of any other country.”
A congressional committee led by Senator Blumenthal sent a letter to Al-Rumayyan last week asking him to cooperate in allowing the committee to subpoena four US consulting firms working for PIF.
U.S. lawmakers have been vocal in their opposition to LIV Golf and the PGA Tour opened considerations to U.S. investors and emphasized that PIF would only be a minority investor in an effort to soften political backlash.
Last week, the PGA Tour closed on an investment of up to $3 billion with Strategic Sports Group, a consortium led by Fenway Sports Group – the owners of Premier League club Liverpool and MLB franchise Boston Red Sox.
The PGA Tour confirmed a $3 billion investment deal with consortium Strategic Sports Group
Strategic Sports Group is led by Liverpool owner John W Henry, Fenway Sports Group (left)
Negotiations between the PGA Tour and the Public Investment Fund are ongoing after the initial December 31 deadline was missed and LIV Golf’s backers were not included as part of the transaction with SSG.
But the Tour memo confirmed that a future co-investment from the Saudi Arabian fund was still on the table, subject to regulatory approval.
The tour said it is making progress in negotiations with the Saudi National Wealth Fund on future investments and a final agreement. Under the original framework agreement, Al-Rumayyan, the PIF governor, would be chairman of PGA Tour Enterprises. It was not clear what influence the collaboration with SSG has on this.
During the tour, it was said that SSG has agreed to any investment by PIF, subject to necessary review and approval.