Business Corruption

Several major UK newspapers, including the Financial Times, The Times, the Guardian, and The Daily Telegraph, assert that the al-Yamamah-BAE deal (discussed under 'Public Procurement and Contracting' in the Corruption Levels section) was essentially based on an 'oil-for-arms' deal in which Royal Dutch Shell and BP played what has been described as a money laundering role. Reportedly, the core of the deal set up by the UK government, the Saudi royal family, BAE, Royal Dutch Shell and BP was a barter agreement that secured USD tens of billions in oil contracts for nearly two decades. After selling the oil and with the consent of the Saudi and UK governments, Royal Dutch Shell and BP deposited the proceeds in an escrow account at the Bank of England from which BAE was paid in stages in accordance with meeting project milestones. It used some proceeds to pay commissions to middlemen who had helped facilitate the transaction.

Further information and extensive documentation is available at Shell News and Royal Dutch Shell online.

Political Corruption

According to Freedom House 2010, high-level or political corruption within the Saudi natural resources sector is not uncommon, and Saudi Arabian oil income seems to have led to increased opportunities for rent-seeking on the part of public officials.

In March 2011, the Saudi oil ministry was accused of corruption, as reported in a March 2011 article by Emirates 247. Namely, it was proved by the Saudi authorities that the oil ministry and the Maaden, a semi-governmental establishment involved in searching for gold and other metals, had collaborated in 'advancing private financial interest' at the expense of public health interests.

In May 2010, King Abdullah ordered the prosecution of over 40 officials on corruption charges for their mismanagement of widespread flooding in Jeddah in November 2009, which resulted in the deaths of 122 people, according to Freedom House 2011.