Saudi Arabia's Crown Prince Mohammed bin Salman put pressure on the country's sovereign investment fund to purchase international stocks in early 2020 as markets struggled due to the Covid-19 pandemic.
The board of the country's Public Investment Fund (PIF) did not agree with the investments, reported The Wall Street Journal.
However, they were forced to spend tens of billions of dollars from the kingdom’s central bank to fulfill the crown prince's demands, according to former PIF governor Yasir al-Rumayyan, after pressure from the country's highest authority King Salman.
This was despite government officials expressing concerns that this move could undermine the Saudi riyal's peg to the dollar.
Crown Prince Mohammed bin Salman reportedly picked the stocks himself and bypassed the normal decision-making channels. The $35 billion stocks rose to $49 billion when the markets eventually rallied, according to Rumayyan.
The power struggle within the PIF is highlighted by the differences between Mohammed bin Salman, who is the chairman of the board, on one hand, and professional financiers on the other trying to maintain fiscal discipline on how the kingdom's massive oil wealth is spent, according to the US newspaper.
Saudi Arabia's Public Investment Fund (PIF) is the world's seventh-largest sovereign wealth fund, reportedly managing $600 billion. Mohammed bin Salman had urged the PIF to invest in videogame makers, luxury car manufacturers, and the English football team Newcastle United.
Critics have said that some of these cultural and sporting investments of being aimed at diverting attention from the kingdom’s gross human rights record.