Forbes publishes huge takedown of Saudi investor Prince Alwaleed

Yesterday, Kingdom Holding Company, the investing firm of Saudi Prince Alwaleed bin Talal Al Saud, sent out a stern press release.

In conjunction with the release of Forbes' 2013 Billionaires list, the Prince announced that he was severing ties with the publication's ranking.

Kingdom alleged that Forbes' methodology was biased against Mideast investors and gave the Prince's disclosures unwarranted scrutiny.

This morning Forbes fired back in a brutal takedown hovering around 3,000 words. It's called, "Prince Alwaleed And The Curious Case Of Kingdom Holding Stock."

Writer Kerry Dolan paints a picture of a man obsessed with presenting the image of a consummate, global business mogul from the glossy Photoshopped magazine covers he sends in his press kits to constant watching of CNBC.

The Kingdom Holding website, Dolan points out, presents the Prince as "the world's foremost value investor."

And of course, foremost has to mean incredibly wealthy. That, says Dolan, is where Forbes' list has come in year after year (but no more).

From Forbes:

The prince first came on Forbes' wealth-hunting radar in 1988, a year after our first Billionaires issue came out. The source: the prince himself, who contacted a FORBES reporter to let him know just how successful his Kingdom Establishment for Trading & Contracting company was–and to make clear that he belonged on the new list.

That outreach proved to be the first in what is now a quarter-century of intermittent lobbying, cajoling and threatening when it comes to his net worth listing. Of the 1,426 billionaires on our list, not one–not even the vainglorious Donald Trump–goes to greater measure to try to affect his or her ranking. In 2006 when FORBES estimated that the prince was actually worth $7 billion less than he said he was, he called me at home the day after the list was released, sounding nearly in tears. “What do you want?” he pleaded, offering up his private banker in Switzerland. “Tell me what you need.”

The anecdotes go on. The Prince lives the life of a hard-working executive, sleeping little and expecting his staff to be on call at his 420-room palace, or his jet, or his 120-acre "farm and resort" at all times. Dolan says he's trying to live up to the legacy of his family, the founders of Saudi Arabia and leaders of Lebanon.

And it's not that he hasn't had his successes in business. Alwaleed got his start making a massive bet on Citi:

From Forbes:

As regulators pressured Citicorp to increase its capital base in the face of bad loans across developing countries, Alwaleed, then unknown outside Saudi Arabia, amassed an $800 million position. That enormous bet ballooned across two Wall Street boom cycles–by 2005 it was worth $10 billion, making Alwaleed, at the time, one of the ten richest people in the world, and earning him a nickname, which he encouraged, of “the Buffett of Arabia.”

The problem, Dolan writes (pulling absolutely no punches) is that Kingdom Holdings' underlying assets do not add up to its own reported value. The Prince, she claims, is using his own personal fortune to boost the company in order to maintain his image.

From Forbes:

…Kingdom Holding shares began what seemed a miraculous rebound in early 2010, rising 57% in the ten weeks prior to the February date that FORBES used to lock in values for that year’s Billionaires list, as Citigroup shares fell about 20%. The prince’s ranking on the FORBES billionaires list surged in lockstep to 19th ($19.4 billion).

In 2011 the pattern repeated. In the ten weeks before FORBES locked down its list, Kingdom Holding shares rose 31% while the Saudi index was up 3% and the S&P 500 was up 9% over that same period. (Prince Alwaleed finished at No. 26 in the world that year, with an estimated net worth of $19.6 billion.) It happened yet again in 2012, when Kingdom shares climbed 56% while the Saudi market was up just 11%, and the S&P 500 was up 9%. (This time Alwaleed was No. 29, with an $18 billion valuation, after FORBES discounted his claims on many of his non-Kingdom Holding assets.)

In this year's calculations, Forbes said it could not justify Kingdom's estimation of Alwaleed's wealth and that the gap between their estimates and his is about $9.6 billion.

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