Softbank is tainted by Saudi Arabia’s notorious image
The disappearance of Saudi Arabian journalist in Turkey, amid strong indications that he may have been murdered, has created a crisis for one of Japan’s richest and most successful businessmen.
Masayoshi Son, the founder of Softbank, is trusted with looking after the vast fortune of the Saudi Arabian government.
CNN reports that Saudi Arabia has pumped $45 billion into the SoftBank Vision Fund, which in turn has invested billions of dollars into tech startups around the world.
For example, last year Softbank invested $4.4 billion in WeWork, which has provided many co-working spaces in cities around the world, including China and Japan.
However, the image of Saudi Arabia has been severely tarnished by the disappearance of the journalist Jamal Khashoggi, who writes a column for the Washington Post, which is often critical of the Saudi authorities.
“What we’re talking about here is a reporter who was allegedly murdered and dismembered in an embassy so this cannot be allowed to stand – it’s so egregious,” the independent technology analyst Stephanie Hare told the BBC.
She said that Saudi Arabia put a further 45 billion into Softbank’s Vision Fund last week. “The Saudis know that oil is not going to be a cash cow for ever so they are investing in tech and buying companies through Softbank,” explained Ms Hare. “But everyone know about the poor record Saudi Arabia has on human rights.”
There is no official statement on the situation on Softbank’s website but the big question is whether the partnership with Saudi Arabia has become too toxic to continue.
Davos in the desert
One way to judge how foreign companies view the situation is to watch if they attend a big investment conference in Saudi Arabia next week, dubbed by the media as Davos In the Desert.
CNN reports that the Japanese company Nikkei has withdrawn as a media partner for the event.
JP Morgan CEO Jamie Dimon and the heads of America’s top investment firms Blackrock and Blackstone are among the leading figures who have decided to stay away. But there has been no announcement from Softbank yet.
One of the goals of Softbank and other Japanese companies which do business internationally is to steer clear of politics as far as possible.
That is also why the Japanese government rarely initiates sanctions, with the notable exception of its tough stand on North Korea.
However, in this instance it will be difficult for Japan and Softbank to ignore the international outcry over Mr Khashoggi’s disappearance and the major implications for all those organisations which do business with the Saudi government.