Saudi Arabia was once a part of Ottoman Empire a long time ago. Before the discovery of oil from this region, the world’s established nations did not give it more importance. After the struggle of many years, Saudis had declared this region as Kingdom of Saudi Arabia in 1925 when Ottoman Empire collapsed. In 1927 British Empire had acknowledged “Saud” as a King of the kingdom of Saudi Arabia—because Saudis supported British Empire to break Muslim caliphate and superpower of that time. After this, Malaysia – who had an alliance with kingdom—announced to make its way apart from Saudi Arabia. After this step –taken by Malaysia— king of Saudi Arabia “Shah Saud” had killed many people in Malaysia and took the rest of the people with him.
Till 1932, King Saud has successfully declared Saudi Arabia as an Empire, so Saudi Arabia tried to take over Yemen, but it did not succeed.
King Saud has 45 sons who were likely to take over the throne of the kingdom. After the World War I, all winners declared their under-control territory as a country, but no one gave importance to this buzzer area of Saudi Arabia.
The leaders of Saudi Arabia knew that there are many reserves of oil underneath their territory, but they were not technically capable of getting this oil out of the soil. So, Saudis requested a company to help them in digging the oil out. In 1938, Saudis had discovered a huge reserve of oil with the help of that company. After this discovery, a new company established named as “Arab-America Oil Company”, which 100% was owned by the United States of America. ExxonMobil owned 10% shares of the company, and Chevron Corporation and one other company had 30% shares [each company owned 30%]. These companies had paid a huge amount after the profit in the name of royalty to the Saudi Family. Saudi Family became a very rich family by getting the royalty from the company.
After World War II, the Oil Industry of Saudi Arabia was damaged. After facing damage, in 1943, the President of the United States Franklin D. Roosevelt had announced that the defense of Saudi Arabia is very important to defend the United States. In 1945, the governments of Saudi Arabia and the United States had an agreement on Oil defense. After this agreement United States had established its army bases in the Kingdom of Saudi Arabia for defense because America didn’t want oil supply to be disrupted. By signing that agreement, Saudi Family started getting a huge amount of money as well as protection.
How corruption is taking the Saudi Kingdom down
Saudi Arabia, one of the richest countries of the world resource wise, now has foreign debts of 28 billion dollars, and domestic debts increased 270 billion dollars. Over the last 30 years, three trillion dollars have been generated mostly by the Oil. Yet, only one trillion dollars have been reinvested into the country, the record of other 2 trillion dollars was not found.
There are four thousand Princes of the Saudi Royal families; each prince gets 1.5 million dollars from Saudi government as an allowance per year.
In 1975, Shah Fahad had introduced a system, which helped Shah Fahad and his closest Family members to sell 0.3 million to 1 million barrel oil in the open market on lesser rates. The money they earned with the help of that system deposited to their [Saudis] Swiss bank accounts. The estimated average income of Shah Fahad was around 3 to 5 billion dollars per year which he earned by selling oil on concession to different Oil Companies. Since 1975, the land has been given to Princes and their families by the government of Saudi Arabia only for selling back to the government. Contract fixing, kickbacks on commercial and defensive contracts, is the third method used by the house of Saud to earn the money. It is believed that every contract signed in Saudi Arabia has some commissions and kickbacks.