Death of Khashoggi Tests the Limits of Corporate Social Responsibility

The torture and murder of Saudi journalist and U.S. resident Jamal Khashoggi earlier this month is a crucial tipping point for the corporate social responsibility community. Several leading companies have called out the Saudi government for its role in the crime, but many others are dissembling. If U.S. and global business leaders fail to act with more clarity and force, the whole corporate social responsibility movement could be exposed as a toothless sham.

Corporate response to the Khashoggi case is all the more important to fill a leadership vacuum here in the U.S., where President Trump has been reluctant to call the Saudi government to account for its actions.

Brand reputation and corporate social responsibility

Human rights organizations have recognized that the Khashoggi murder poses an existential threat to the corporate social responsibility movement, and they are prodding companies to respond.

From a brand reputation perspective, the stakes are high.

The Center for International Policy is one example. The organization has issued a public letter to dozens of high profile companies that have planned to attend the Saudi government's much-touted Future Investment Initiative summit in Riyadh, scheduled for October 23-25.

The letter came through the organization's Win Without War initiative. Here's the money quote:

...By supporting this conference, which is so closely associated with the crown prince and his regime, you not only lend the Saudi government-which just murdered a U.S.resident-legitimacy, but also risk hurting your brand. Consumers and investors now shop with a conscience and your association with the brutal and thuggish tactics of the Saudi government could damage your business interests.

The Huffington Post has more details about participants in the Saudi summit, including this observation:

Among the major companies and commercial figures still connected to the Future Investment Initiative conference are Peter Thiel, a close ally of President Donald Trump, and Joe Kaeser, head of the German firm Siemens, who are on the conference’s advisory board; and the consulting firms Boston Consulting Group, Deloitte, EY, McKinsey & Company, Oliver Wyman and Bain & Company, who are co-sponsors of the conference.

Meanwhile, CNN, Bloomberg and other media companies have pulled their sponsorships for the summit, though they will most likely provide some level of coverage.

A number of high level executives also previously announced that they would not represent their companies at the summit, including Ford, JPMorgan Chase, Uber, Blackstone, BlackRock, MasterCard and Google, though some if not all of these companies may still maintain a lower level of representation.

The heads of HSBC, Credit Suisse and Standard Chartered banks, and the IMF and the London Stock Exchange also pulled their high-level representation earlier this week, before the letter went out, as did -- finally -- U.S. Treasury Secretary Steven Mnuchin.

The Jamal Khashoggi murder as a message

The Jamal Khashoggi case sparked global outrage when evidence leaked out that the journalist -- a known critic of Saudi First Deputy Minister and Crown Prince Mohammed bin Salman -- had been reportedly tortured, beheaded and dismembered inside the Saudi consulate in Istanbul, Turkey.

More than a dozen Saudi operatives have been identified as involved in the crime. The common wisdom is that they bungled a planned coverup.

However, as more evidence emerges, it is becoming more likely that the Khashoggi murder was carried out exactly as intended. It was more than an exercise in silencing a media critic. It was a message.

In all its spectacular cruelty, in the number of its perpetrators flown in for the occasion, in its location within a Saudi government facility on foreign soil, and in its timing -- barely three weeks before the Future Investment Initiative Summit -- the Khashoggi murder amounts to a bloody, brutal dare to the corporate social responsibility community.

The Silicon Valley connection

In the latest development, CNN and other media have published the full text of a statement issued by the Saudi government outlining its official explanation of the Kashoggi murder as of Friday, October 19. Here is the key passage:

The results of the preliminary investigations also revealed that the discussions that took place with the citizen Jamal Khashoggi during his presence in the consulate of the Kingdom in Istanbul by the suspects did not go as required and developed in a negative way led to a fight and a quarrel between some of them and the citizen Jamal Khashoggi, yet the brawl aggravated to lead to his death and their attempt to conceal and cover what happened.

That explanation has been received as absurd on its face, with the notable exception of President Trump, who stated that found it "credible."

The President's conciliatory attitude is not surprising, considering the Trump family's private dealings with Saudi businesses and investors.

In this context, it's worth taking a closer look at Peter Thiel, the "close ally of Trump" named in the Huffington Post article cited above. Thiel, a top Silicon Valley investor, is not simply one among many people "connected" to the summit. He is listed as one of only nine members of the Future Investment Initiative advisory board.

That position is representative's of Thiel's placement in the financial nexus of Saudi investments in Silicon Valley tech companies and Saudi business dealing with the Trump family.

It's also representative of Thiel's somewhat underappreciated role in propelling Trump into the Oval Office. Thiel emerged as an active supporter of Donald Trump during the primary season in 2016. During the presidential campaign he popped in at key junctures in to provide op-eds, speeches, and financial assistance. That including funds for Cambridge Analytica, the data firm at the heart of the 2016 election tampering scandal.

Thiel's support for Trump provoked protests against Facebook during 2016 campaign, as Facebook CEO and co-founder Mark Zuckerberg defended Thiel's position on the company's board of directors. Protests or not, Thiel is still on the board.

As for Thiel and Trump, it appears that the fortunes of the two men will remain entwined for the foreseeable future. Last week, CNBC reported that Thiel has already donated $250,000 to Trump's 2020 re-election campaign.

Cue the outrage -- or not, as the case may be.

Image: via Future Investment Initiative.