January 19, 2023

THE TIGHTENING NOOSE:

The Saudis are dodging a U.S. court, and the impact on LIV Golf could be huge (Eamon Lynch, January 14, 2023, Golfweek)

Since LIV requested an expedited court process and promised Saudi co-operation, it's likely the judge will compel discovery from Al-Rumayyan and his Fund, a ruling that would have unappetizing implications for LIV players who might hope to avoid having their affairs spreadeagled for lawyers. The court may also draw negative inferences from a Saudi refusal to comply -- potentially ruinous for LIV's antitrust lawsuit. But co-operating with discovery -- even if the court sets strict parameters -- is a considerably worse option for the Fund and Al-Rumayyan.

In the U.S. legal system, discovery can be permissive to the point of invasive, and comes with crossfire risks. Former Raiders coach Jon Gruden was fired for racist and homophobic emails unearthed during discovery in a workplace suit involving the Washington Commanders. In this case, discovery could expose to unwanted scrutiny both known and stealth investments by the Saudi fund. Even if discovery is confined to the golf sphere, tugging at threads could unravel things the Saudis would much rather protect.

For example, LIV has become explicitly politicized with its attachment to Donald Trump, staging events at the former president's golf courses as he publicly urged PGA Tour players to "take the money" from his Saudi partners. Scrutiny of the relationship between the Fund and Trump would be unwelcome in Riyadh and Palm Beach. Federal law prohibits foreign governments from attempting to influence U.S. domestic politics, and discovery risks highlighting how inherently political the Saudi fund's investments are.

The Public Investment Fund -- which is ultimately controlled by Crown Prince Mohammed bin Salman -- invested $2 billion in a private equity company owned by Trump's son-in-law, Jared Kushner, over the objections of its own advisors. The LIV project was thought inviable by the Fund's consultants, McKinsey and Company, yet another couple of billion dollars has been torched there. If the Saudi fund is making investments that are economically irrational, discovery might unearth motives that are grounded not in profit nor sportswashing, but in politics.

Posted by at January 19, 2023 2:36 PM

  

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