Former McKinsey Executive Imprisoned by Saudis
Former McKinsey Executive Imprisoned by Saudis
World
Saudi Arabian officials arrested a partner at consulting giant McKinsey & Co. in the fall of 2017 and have been holding him in detention since then, people familiar with the matter say. In recent months, he has been repeatedly beaten, two of those people said.
A McKinsey spokesman said that as of early this year the consultant, Hani Khoja, is no longer a McKinsey employee.
The detention and alleged physical abuse of Mr. Khoja, a Saudi national who was arrested as part of a sweeping crackdown, underscore the ethical quandaries multinational companies face working in Saudi Arabia.
Three years into an ambitious economic reform effort, the kingdom’s crown prince, Mohammed bin Salman, has created billions of dollars in business opportunities for companies and investors and lifted some of the kingdom’s tight social restrictions.
But officials in his government have also locked up dissidents, attacked neighboring countries, been accused of manipulating the Saudi stock market and allegedly ordered the killing of dissident columnistJamal Khashoggi. Saudi Arabia has acknowledged Mr. Khashoggi was murdered in the consulate. But it has denied Prince Mohammed had any role and blamed the operation on rogue operatives.
Mr. Khoja co-founded a consulting firm, Elixir Creative Solutions Co., that McKinsey bought in 2017 for an undisclosed amount. The deal made Mr. Khoja a McKinsey partner. Elixir was attractive to McKinsey in part because it did work for the Saudi Ministry of Economy and Planning, say people familiar with McKinsey’s strategy.
One Elixir co-founder was an official with the Ministry of Economy and Planning, which awards business to consulting firms, while McKinsey negotiated to buy the firm, according to public documents and a person familiar with the matter. The McKinsey spokesman said the official, Sami al Zuhaibi, left government before the Elixir deal closed.
Few companies are as involved with the Saudi state as McKinsey, which has been working for the country for four decades. The firm has advised Prince Mohammed on some of his reform efforts and the Ministry of Economy and Planning, which has a large role, became known within the Saudi government as the “Ministry of McKinsey” for the number of foreign consultants working in its offices.
Mr. Khoja was arrested some time around Nov. 2, 2017, in part of what the Saudis said was a corruption crackdown but that some within the government have called a political purge by the crown prince.
Detainees including Mr. Khoja were initially held at Riyadh’s Ritz-Carlton hotel. Some were released after paying fines or relinquishing assets to the government, while others like Mr. Khoja were moved to detention centers where certain prisoners—including some human-rights advocates—have been beaten in recent months, the Journal reported in November.
A spokesman for McKinsey said the firm doesn’t know where Mr. Khoja is and hadn’t been told that he was physically abused. “We have sought information from the authorities. We are anxious to know more and are in regular touch with Mr. Khoja’s family,” the spokesman wrote in an email.
The Saudi royal court didn’t respond to questions about Mr. Khoja, Elixir, the Ministry of Economy and Planning, and detentions in general. A spokesperson for the government didn’t answer questions.
Mr. Khoja was ensnared in the crackdown due to his relationship with the economy ministry’s chief, Adel Fakeih, people familiar with the matter say. Mr. Fakeih was arrested in the sweep and charged with corruption. Representatives for Mr. Fakeih couldn’t be reached.
Mr. Khoja hasn’t been publicly charged with a crime. One of the people familiar with the case said government officials have accused Mr. Khoja of corruption, bribery and being part of a ring aiming to topple the Saudi government. It couldn’t be determined whether Mr. Khoja has lawyers representing him.
The McKinsey spokesman said the firm continues to pay Mr. Khoja under the terms of his contract. The spokesman declined to say why Mr. Khoja’s employment ended during his absence.
Recent events like the Khashoggi killing have forced McKinsey, like other businesses, to decide whether they want to remain in Saudi Arabia. McKinsey, which says it plans to stay, began working for the Saudi state oil company in 1974, and has over the decades formed deep ties in government and the private sector. The consulting firm has hired the sons and daughters of Saudi officials, the Journal reported last year.
Crown Prince Mohammed bin Salman has created billions of dollars in business opportunities.Photo: Bandar Algaloud/Saudi Royal Court/Reuters
The crown prince’s reforms, while generating business for McKinsey, also included a push to replace foreign consultants with Saudis. Since 2015, McKinsey and other global firms saw some consulting jobs, including from the Ministry of Economy and Planning, go to Elixir, says a person who worked on McKinsey’s Saudi projects at the time.
Mr. Khoja was a charismatic figure in a Saudi business community eager to show that innovation and entrepreneurship could spring up domestically. After attending college and graduate school in the U.S., he returned to Saudi Arabia and spent more than a decade working in marketing for Procter & Gamble Co. , according to Mr. Khoja’s autobiography, which he published last year as an inspirational guide to would-be entrepreneurs.
In 2005, Mr. Khoja left Procter & Gamble to start Elixir, with the aim of providing strategic consulting to Saudi startups. But he said in an interview with a local publication last year that Elixir had recently been using “all of our capacity” to work for government agencies on Prince Mohammed’s reforms.
McKinsey said it didn’t buy Elixir for its connections to the government. “We acquired Elixir because of its capabilities and strong local track record of implementing change programs with private, nonprofit and public-sector clients,” the McKinsey spokesman said.
McKinsey operated Elixir only for about six months after the deal before the crown prince’s corruption crackdown started. Elixir consultants learned of Mr. Khoja’s arrest via WhatsApp messages from him, according to a person who saw the message.
“Don’t talk about this with anyone,” Mr. Khoja wrote to a staff WhatsApp group at the time. That was the last they heard of him.
McKinsey made no public statements on the arrests. It replaced Mr. Khoja as CEO of Elixir with a Dubai-based McKinsey executive and appointed a California-based McKinsey partner as chairman. The firm has continued working for Prince Mohammed’s government.
Write to Summer Said at summer.said@wsj.com, Justin Scheck at justin.scheck@wsj.com and Bradley Hope at bradley.hope@wsj.com
