The direct litigation involving the PGA Tour, LIV Golf and Saudi Arabia’s Public Investment Fund was put aside with last June’s framework agreement, but there are still plenty of lawsuits surrounding the controversial dealings between the entities.
The PIF’s governor and LIV Golf chairman, Yasir Al-Rumayyan, is allegedly facing a $74 million lawsuit in Canadian court, and on Wednesday Bloomberg reported the Kingdom has threatened to imprison not only bankers but also consultants it has worked with if they choose to cooperate with the United States government as it continues to investigate the agreement. Back in November, the PIF sued its advisers in Saudi court to block any submission of information to the Senate Committee on Homeland Security and Governmental Affairs.
Both the Department of Justice and U.S. Senate have held a keen interest in the talks between the Tour and PIF, the financial backers of LIV Golf, over the last seven months. On Feb. 6, the committee held a hearing in Washington, D.C., that featured PIF consultants Paul Keary (Teneo Strategy), Michael Klein (M. Klein & Co.), Rich Lesser (Boston Consulting Group) and Bob Sternfels (McKinsey).
“The PIF has been explicit 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 imprisonment for a maximum of 20 years,’” Lesser said. “We risk criminal and financial penalties for the firm and for individuals working or living in Saudi Arabia.”
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“This represents aberrant behavior for a client, and, quite frankly, for the PIF, who has historically been a client that has operated with best practices of governance with us,” added Klein, one of the PIF’s top advisers.
The committee took issue with the fact that the four advisers have not fully cooperated with the investigation and that the firms, according to Bloomberg, “have only provided a fraction of the documents demanded in a congressional subpoena.” Senate records detailed that the information submitted largely consisted of calendar invites with redacted names, publicly available records and news clippings.
“It’s simply staggering to me that American companies are not only willing to accept this claim, allowing the Saudi government to determine what is permitted to provide this subcommittee — but also that they would use it to justify their refusal to comply with a duly issued congressional subpoena,” said Senator Richard Blumenthal (D-Conn.).
The PIF released the following statement in response to the hearing:
We have been and are committed to working with the Subcommittee in good faith in a manner that is consistent with PIF’s status and obligations as an instrumentality of Saudi Arabia. We have made, and are continuing to make, significant efforts to facilitate the production of requested information from our advisors consistent with the laws of Saudi Arabia, which should be recognized like those of any other country.
To date, we have facilitated production from our advisors of thousands of substantive pages of presentations, correspondence, and final deliverables related to our investments and their work on our behalf. We are engaged in extensive and rapid document reviews and will continue working constructively and with integrity with the Subcommittee with relevant information that can legally be disclosed under the laws of Saudi Arabia.
The Subcommittee’s requests are sweeping and unprecedented in seeking to compel the production of confidential and classified information of a foreign sovereign instrumentality, but we hope to work with the Subcommittee to resolve these issues.
PIF is confident that its support for innovative and transformative companies has and will promote economic opportunity and job creation in the United States, and around the world. To date, PIF has invested over $79 billion in the U.S. economy, and is expected to grow that investment significantly by 2030. Our estimates show that investment would lead to more than 550,000 new American jobs. As a rational investment fund, PIF acts independently in carrying out its investment activities. As a long-term investor and catalyst of change, PIF is invested in the projects, companies and partners that will create new opportunities for investment and employment, including in the U.S., and shape global industries of the future.
The original framework agreement between the Tour and PIF set in motion plans to create a new for-profit entity that would change professional golf as we know it. The Dec. 31, 2023 deadline to strike a deal was missed and extended into 2024. Over the last few months, the Tour has fielded offers from a handful of outside investment groups, and last week secured a $3 billion investment from the Strategic Sports Group, a consortium of sports owners led by Fenway Sports Group, to create the aforementioned entity, now known as PGA Tour Enterprises. The investment has been seen in two ways: one, as a way to dilute any Saudi investment to make a deal more palatable for the U.S. government, and two, as a way for the Tour to block out the PIF after ending litigation.
Discussions between the Tour and PIF remain ongoing.
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