The ownership status of Canadian landmarks including the Royal York Hotel, the Chateau Frontenac and the Banff Springs Hotel has been placed in question by the startling arrest Saturday of billionaire Saudi Prince al-Waleed bin Talal and close to 50 other prominent Saudi nationals by Saudi authorities.

Al-Waleed, 62, used to be the largest investor in the Fairmont chain that operates those hotels until its sale to the French AccorHotels conglomerate in 2015. However, he retains a 5.8 per cent stake in the AccorHotels conglomerate through his investment company, Kingdom Holding Co. and still retains great influence over the chain.

In an abrupt re-ordering of the Saudi power structure, Saudi King Salman directed his son and designated successor, Crown Prince Mohammed bin Salmon, to arrest 11 of the Saudi kingdom’s highest-ranking princes.

Another 38 prominent Saudis were arrested on the weekend, including four sitting cabinet ministers, several former government ministers, and prominent Saudi tycoons. The once powerful ministers of finance and of the National Guard were fired and charged with corruption.

Dressed up as an anti-corruption drive, the dragnet, unprecedented in modern Middle East history, is actually a bid to consolidate power in Crown Prince Mohammed bin Salman. Widely known as “MBS,” Mohammed heads the new anti-corruption agency that made the arrests. MBS is expected to succeed his father, octogenarian King Salman, as the ruler of the Saudi kingdom by early next year.

The startling power grab has already triggered a 3 per cent surge in the world oil price. Saudi bonds have slipped in price, since their prices did not factor in political instability in a country long regarded as the most stable in Arab world.

Shares in al-Waleed’s Kingdom Holdings conglomerate have plunged. Investors fear that some or all of Kingdom's assets could be expropriated by the Saudi government.

That instability has sparked jitters among fellow investors in al-Waleed’s remarkably diverse global investment portfolio. Al-Waleed’s holdings include major stakes in Apple, Twitter and other iconic Silicon Valley firms; the U.S. banking giant Citigroup; and JD.com, a leading Chinese online merchant, to name a few.

A change in ownership of al-Waleed’s 5 per cent stake in Rupert Murdoch’s media empire puts in jeopardy the Murdoch clan’s continued control of Fox News, the 20th Century Fox film studio and other Murdoch assets. The Murdochs hold just 14 per cent of the empire’s stock, not enough on its own to thwart activist investors’ bids to diminish the Murdochs’ control.

Al Waleed’s stake in the Accor chain is now uncertain given the limitless powers with which MBS’ anti-corruption agency is invested. Those powers include the authority to seize assets of Saudi nationals.

That has real estate observers speculating about the fate of al-Waleed’s historic Plaza hotel in Manhattan, and the prospect of London’s elite Savoy hotel becoming “Saudi Arabia government property,” as the U.K. Daily Mail suggests.

Optimists say that Saudi Arabia’s new one-man rule could lead to more stability for outside investors. For decades until last weekend, outside investors in Saudi Arabia had to account for power-sharing among princes vying for influence within the ruling House of Saud.

With power now consolidated in MBS, they argue, Saudi Arabia is more likely to stick with its current practice of reducing oil production, and encourage its fellow OPEC member countries to follow suit. That would put a higher floor under the world oil price.

But that assumes the 32-year-old crown prince is able to hold onto power as he embarks on sweeping reforms. Mohammed's ambition to reinvent Saudi Arabia is likely to promote the emergence of rival factions in the House of Saud and the country's powerful clerical groups.

Mohammed bin Salman has invited qualms about his rule with his arbitrary arrests last weekend, and his arrests of scores of clerics and political dissidents in September.

As defence minister since 2015, MBS has been unsuccessful in the costly war Saudi Arabia is waging in Yemen. And Mohammed's regimen of trade and travel blockades of Qatar, citing supposed Qatar support of terrorism as his motive, has not seen Qatar accede to Saudi demands. Neither has MBS’s belligerence toward Iran, Saudi Arabia’s chief enemy, curtailed Iran’s drive for greater regional influence.

Arresting al-Waleed could backfire on Mohammed in light of his recent campaign to attract foreign investment.

Loading... Loading... Loading... Loading... Loading... Loading...

Al-Waleed, who this year has publicly and frequently supported the crown prince’s liberalization campaign, has been channeling offshore investment into his homeland for decades.

Al-Waleed could have been an ambassador in ramping up foreign investment that MBS needs for, among other things, an ultra-modern supercity he wants to build.

Al-Waleed is a business partner and friend of scores of the world’s most influential investors. They include Warren Buffet; Bill Gates, an investment partner of al-Waleed’s in the Four Seasons chain; Lloyd Blankfein, longtime CEO of Wall Street powerhouse Goldman Sachs Group Inc.; and billionaire investor Michael Bloomberg, former mayor of New York.

Crown Prince Mohammed’s own gala investor conference this year generated only a tepid response. And the arrest of al-Waleed just a month after that gala, in which al-Waleed participated as a cheerleader for MBS’s ambitious makeover of Saudi Arabia, has put a chill in global investors.

In contrast to an opaque Saudi Arabia, an outspoken al-Waleed is easily the world’s best-known Saudi prince.

While he is a bit of an outsider within the royal family, given his extensive activities abroad, his arrest is hard to figure. It is true that al-Waleed’s father, Talal bin Abdulaziz al Saud, has opposed Prince Mohammed’s growing power, though al-Waleed himself has done rather the opposite.

Such is al-Waleed’s prominence that Robert Jordan, a former U.S. ambassador to Saudi Arabia, has told Time magazine that al-Waleed’s arrest is “the equivalent of having Bill Gates, Warren Buffet and Colin Powell arrested. It is a shocking display of power.”

“As a leader who is set to remain in power for decades, Mohammed bin Salman is remaking the kingdom in his own image,” Kristian Coates Ulrichsen, a research fellow at the James A. Baker III Institute for Public Policy at Houston’s Rice University, told the Associated Press.

The recent arrests are “signaling a potentially significant move away from the consensual balancing of competing interests that characterized Saudi rule in the past.”

Long a holdout to the autocratic power that characterizes Middle East governance, Saudi Arabia finally has succumbed to one-man rule. Given the country’s strategic location and immense oil reserves, the world can only hope that yet another brutal dictatorship is not on the rise.

Correction – November 15, 2017: This article was edited from a previous version that mistakenly said Saudi Prince al-Waleed bin Talal is the largest investor in the Fairmont chain that operates landmark hotels in Canada such as the Royal York Hotel, the Château Frontenac and the Banff Springs Hotel. In fact, al-Waleed sold his stake in the Fairmont Hotel and Resorts chain of Canadian hotels to the French AccorHotels conglomerate in 2015 but retains a 5.8 per cent stake in the conglomerate through his investment company, Kingdom Holding Co.

Read more about: