Businesses must decide if Saudi Arabia’s account of journalist’s killing is enough to continue doing business with them.

There’s a conspicuous lack of A-listers in Riyadh this week. Business and financial luminaries are keeping their distance after the fate of dissident journalist Jamal Khashoggi turned Saudi Arabia‘s annual “Davos in the Desert” investment summit into a litmus test of corporate values.

The three-day conference which kicks off on Tuesday in the Saudi capital was supposed to showcase Crown Prince Mohammed bin Salman’s (MBS) ambitious Vision 2030 plan to wean the kingdom off oil and foster an economy powered by private investment and innovation.

But Khashoggi’s murder and lurid allegations of a bone saw-wielding hit squad have cast a feudal pale over the kingdom, damaging the crown prince’s image as a progressive, modernising ruler with a vision investors want to buy into.

Riyadh has admitted that Khashoggi, a veteran Saudi journalist and contributor to the Washington Post, drew his last breath inside Riyadh’s consulate in the Turkish city of Istanbul on October 2. But their claim that the 59-year-old was killed in a brawl with officials strains credulity.

For more than two weeks, the Saudis insisted Khashoggi left the consulate safely and they had no idea what happened to him.

But a steady stream of leaks by unnamed Turkish officials, including allegations of recorded evidence that Khashoggi was dismembered and decapitated by Saudi agents, drove a growing international outcry.

A-list exodus

In the absence of a credible narrative absolving Riyadh of foul play, business and financial figures had to weigh whether attending the investor conference was worth landing in the crosshairs of social justice warriors and champions of press freedom.

“Millennials and younger people really want their companies to stand up for what they believe in and to have a strong set of values,” said Paul Argenti, professor of corporate communications at Dartmouth’s Tuck School of Business.

“Associating yourself with someone or something or some country or some politicians who has done something that goes against the values of the organisation and the people in it is a really big problem.”

As outrage over Khashoggi intensified, dozens bailed on the investment summit, including US Treasury Secretary Steven Mnuchin and IMF Managing Director Christine Lagarde.

Executives with deep financial ties to the kingdom also bowed out.

Uber CEO Dara Khosrowshahi withdrew despite Saudi Arabia’s sovereign wealth fund being one of the biggest investors in his company. Richard Branson, the Virgin Group chairman, suspended his directorship in two Saudi tourism projects and halted talks over a one billion dollar Saudi investment in his space tourism companies.

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In a blog post, Branson explained that if the Turkish version of events proved true, it “would clearly change the ability of any of us in the West to do business with the Saudi Government”.

A vision in peril

Even before the Khashoggi affair grabbed global headlines, Saudi Arabia’s economic transformation faced major obstacles. Unveiled in April 2016, Vision 2030 involves investing the kingdom’s oil wealth in sustainable industries and encouraging the private sector to invest in Saudi Arabia; a radical departure from how business has been done for decades.

“One of the things we have to recognise about Vision 2030 is how profoundly destabilising it could be,” said Steven Cook, senior fellow at the Council on Foreign Relations.

“Because politics and business have been done in a certain way for a very long time, there are vested interests around who want to preserve the system, even if it is economically irrational.”

In November last year, the government demonstrated how determined it was to upend the status quo when it rounded up scores of wealthy and influential Saudis and imprisoned them in Riyadh’s opulent Ritz-Carlton hotel.

The detainees were released from the Ritz after the government had extracted more than $100bn in settlements, giving the so-called “anti-corruption” crackdown the appearance of a shakedown.

The following quarter saw a big jump in Saudi residents moving bank deposits abroad. Though it’s difficult to confirm exactly what drove the capital flight, one thing that is certain is that MBS’s sales pitch has failed to attract foreign investors.

Figures published by the United Nations Conference on Trade and Development showed foreign direct investment (FDI) in the kingdom fell off a cliff last year, plunging to $1.4bn from $7.5bn in 2016.

And there’s been little indication that FDI has improved substantially in 2018.

Jason Tuvey, senior emerging markets economist at London-based Capital Economics, wrote in a research note that the uncertainty created by last year’s anti-corruption crackdown “is probably one reason why FDI inflows have stayed low this year”.

Another self-inflicted blow to economic reforms landed in July, when the country shelved plans to sell a five percent stake in state oil giant Saudi Aramco.

Billed as the biggest initial public offering in history, the postponement generated speculation that the kingdom was uncomfortable with the level of transparency required for a public offering and that markets would pour cold water on what many saw as MBS’s lofty two-trillion-dollar-valuation of the company.

Diplomatic missteps have also damaged the 33-year-old crown prince’s progressive credentials.

While Saudi Arabia won plaudits this summer for becoming the last country in the world to allow women to drive, it squandered goodwill by arresting peaceful women’s rights and civil society activists.

When Canada’s foreign ministry tweeted its concern and called for the activists to be released, the Saudis expelled Canada’s ambassador and suspended new investment and trade with Ottawa – an escalation that struck many observers as an imprudent and immature overreaction.

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A matter of time?

The Saudi government announced the arrest of 18 Saudi nationals over Khashoggi’s death, while also announcing the dismissal of five officials.

US President Donald Trump questioned the veracity of Riyadh’s story, but he continues to endorse MBS’s leadership.

Trump also raised the possibility of sanctions but said he hoped they would not jeopardise billions of dollars in US arms sales to Saudi Arabia.

Some Republican and Democratic members of Congress are not buying Riyadh’s explanation, but if sanctions are forthcoming, the Saudi central bank has $510bn in foreign exchange reserves to weather the storm.

Meanwhile, Western business and financial firms must decide whether the Saudi version of events – which is still deeply at odds with Turkey’s – absolves the crown prince of complicity to the point where they can comfortably do business with him.

Suspending investment plans is a hedge that leaves the door open to restarting talks.

And as Khashoggi’s murder slips into the archives of Saudi misdeeds, the lure of billions of dollars to be made on the kingdom’s economic reinvention may be enough for business leaders to move past the crisis.

“Give it six, nine, 12 months and business will be back,” said Cook, from the Council on Foreign Relations. “I suspect in a lower profile but people want to do business in Saudi Arabia.”