That $300 Million Chateau? One More Jewel for a Saudi Reformer
Posted December 16, 2017 6:59 p.m. EST
Updated December 16, 2017 7:06 p.m. EST
LOUVECIENNES, France — When the Chateau Louis XIV sold for over $300 million two years ago, Fortune magazine called it “the world’s most expensive home,” and Town & Country swooned over its gold-leafed fountain, marble statues and hedged labyrinth set in a 57-acre landscaped park. But for all the lavish details, one fact was missing: the identity of the buyer.
Now, it turns out that the paper trail leads to Crown Prince Mohammed bin Salman, heir to the Saudi throne and the driving force behind a series of bold policies transforming Saudi Arabia and shaking up the Middle East.
The 2015 purchase appears to be one of several extravagant acquisitions — including a $500 million yacht and a $450 million Leonardo da Vinci painting — by a prince who is leading a sweeping crackdown on corruption and self-enrichment by the Saudi elite and preaching fiscal austerity at home.
“He has tried to build an image of himself, with a fair amount of success, that he is different, that he’s a reformer, at least a social reformer, and that he’s not corrupt,” said Bruce O. Riedel, a former CIA analyst and author. “And this is a severe blow to that image.”
The story of Chateau Louis XIV, as pieced together through interviews and documents by The New York Times, unfolds like a financial whodunit, featuring a lawyer in the Grand Duchy of Luxembourg and a fixer for the very rich from the Mediterranean nation of Malta. Even Kim Kardashian made a cameo at the chateau, reportedly considering it for her wedding to Kanye West.
The ownership of the chateau, in Louveciennes, France, near Versailles, is carefully shrouded by shell companies in France and Luxembourg. Those companies are owned by Eight Investment Co., a Saudi firm managed by the head of Mohammed’s personal foundation. Advisers to members of the royal family say the chateau ultimately belongs to the crown prince.
Eight Investment was the same company that backed Mohammed’s impulse buy of the 440-foot yacht from a Russian vodka tycoon in 2015. The company also recently bought an 620-acre estate in Condé-sur-Vesgre, known as Le Rouvray, an hour’s drive from Paris. The chateau’s architect is refurbishing the manor house there and building structures for an apparent hunting compound, according to permit records at the local town hall.
Versailles style, modern amenities
The chateau’s developer, Emad Khashoggi, nephew of the late billionaire arms dealer Adnan Khashoggi, bulldozed a 19th-century castle in Louveciennes to make way for the new chateau in 2009. To the naked eye, it appears to have been built in the time of Versailles, the royal palace that set a world standard for gaudy luxury. But the 17th-century design camouflages 21st-century technology. The fountains, sound system, lights and whisper-silent air conditioning can all be controlled remotely by iPhone.
Along with more standard flourishes for top-of-the-line properties, like a wine cellar and movie theater, the rotunda features an exquisite fresco on the ceiling while the moat includes a transparent underwater chamber with sturgeon and koi swimming overhead. A statue of Louis XIV made of Carrara marble stands watch over the grounds.
“The idea is tacky, and then once you visit, it isn’t,” said Marianne Merlino, who was the town’s deputy mayor during construction. “Like in Versailles, that was way over the top, too, and like Louis XIV, he achieved something really quite incredible.”
An assertive young leader
In less than three years in the public eye, Mohammed, 32, has forged a reputation as an assertive — some critics say reckless — leader. He launched an air campaign in Yemen and spearheaded the blockade of Qatar. Yet he also appears to have won the popular support of many young Saudis for reining in the country’s religious police, promising to give women the right to drive and announcing that movie theaters will be allowed to open again.
But his swift rise has ruffled some of his elders, especially when he shoved aside his older cousin to become crown prince. He has come under even more scrutiny since the arrests last month of nearly a dozen of his royal cousins and hundreds of other businessmen or officials, who have been detained at the Ritz-Carlton in Riyadh, now the world’s most luxurious jail. The government characterized the arrests as a crackdown on corruption, but critics have called it a political purge and a shakedown.
Mohammed, in an interview with The New York Times columnist Thomas L. Friedman, said he expected the state to recoup some $100 billion in settlements from the detained elite. But he dismissed as “ludicrous” accusations that the arrests were politically motivated, saying that was the only way to root out corruption and self-dealing.
“So you have to send a signal, and the signal going forward now is, ‘You will not escape,'” he said.
Neither he nor the Saudi government responded to requests for comment for this article.
Austerity at home, luxury abroad
Even before the crackdown, unbridled spending by the king’s family, whose income sources remain opaque, had raised eyebrows. With the price of oil, the main source of the country’s wealth, having plummeted from record highs in the past decade, the government has tried to close yawning budget deficits with financial discipline.
But last year, even as the government canceled a quarter of a trillion dollars’ worth of projects to rein in deficits, King Salman was building a luxurious new vacation palace on the Moroccan coast.
The year before, shortly after he was named deputy crown prince, Mohammed was vacationing in the south of France when he fancied a magnificent yacht with two swimming pools and a helicopter.
A trove of records leaked from a Bermuda law firm, known as the Paradise Papers, reveal how platoons of lawyers, bankers and accountants in Germany, Bermuda and the Isle of Man worked furiously to quickly transfer ownership to Eight Investment. The price, according to drafts of the contract, was 420 million euros, or $494 million in today’s dollars — even more than that for the chateau.
Emails between the lawyers said the yacht would be owned by a Cayman Islands company called Pegasus VIII, which was created in 2014 when Mohammed was reported to have bought another yacht, renamed the Pegasus VIII. That yacht cost about $60 million, according to the seller, Ronald Tutor, a California investor. Last month, Leonardo da Vinci’s painting “Salvator Mundi” sold for $450.3 million to an anonymous buyer, the highest price for any work of art sold at auction. The buyer, The Times found, turned out to be an obscure Saudi prince with close ties to Mohammed. People familiar with the sale and U.S. intelligence officials said he was acting on behalf of the crown prince.
The Saudi government later disputed that report, saying variously that the Saudi buyer acted as an agent for Abu Dhabi, in the United Arab Emirates, where the painting will hang at the new branch of the Louvre, or that the crown prince had purchased the painting to give to Abu Dhabi. People familiar with the details insist the crown prince was the real buyer at the time of the sale.
While the spending habits of Saudi princes have been chronicled for decades, the Paradise Papers as well as the Panama Papers — leaked records obtained by a German newspaper, Süddeutsche Zeitung, which shared them with the International Consortium of Investigative Journalists and other news organizations — provide new details. Crown Prince Mohammed’s wealth, vast as it is, represents only a portion of the riches accumulated by King Salman’s branch of the House of Saud.
In addition to two stately homes in London connected to Salman, his son, Prince Turki bin Salman, is listed as the guarantor of an Isle of Man company that sold a penthouse apartment a short walk from Westminster Abbey for over $35 million in 2014. Prince Sultan bin Salman, a half-brother of the crown prince and the first Arab in outer space, purchased a luxury Boeing jet that typically costs more than $100 million through an offshore shell company.
King Salman’s vast compound on Spain’s southern coast is owned by two Panamanian companies, which are in turn controlled by a Luxembourg company belonging to the king and his children. Another holding company, based in the tiny principality of Liechtenstein, owns the king’s villa on the French Riviera, where actress Rita Hayworth celebrated her marriage in 1949.
Peeling the layers of ownership
The two new French properties, Chateau Louis XIV and Le Rouvray, are owned by two French companies. Those companies are owned by a Luxembourg company, Prestigestate SARL, which is in turn owned by Eight Investment. Thamer Nassief, who lists his occupation on LinkedIn as “President of Crown Prince Private Affairs,” is a manager of both Prestigestate and Eight Investment.
Eight Investment, according to documents from the Bermudan law firm Appleby, is “owned by members of the Saudi Royal Family,” and its “wealth is derived from the king and the state.”
The three listed shareholders are Bader Al Asaker, who heads the crown prince’s personal foundation; Hazim Mustafa Zagzoog, the head of private affairs for King Salman; and Bader Ali al-Kohail, the Saudi ambassador to the Maldives, the Indian Ocean archipelago where the crown prince hosted a series of lavish parties featuring rapper Pitbull and South Korean singer Psy.
Chateau Louis XIV is one of several castles in Louveciennes, including one that belonged to Madame du Barry, the chief mistress of Louis XV. The town was later popular with Impressionist painters and is now an affluent suburb of Paris.
‘The dream of his life’
Town officials who worked with Khashoggi on the project described it as a near obsession. “Khashoggi said it was the dream of his life to make a thing like that,” said Merlino, the former deputy mayor. “He wanted to do the best in every field, and he did.” Khashoggi declined through a spokeswoman to comment. Some of the most lavish work, including the gilding, was performed by atelier Mériguet-Carrère, which restored the Élysée Palace and the Palais Garnier opera house in Paris. The head of the company, Antoine Courtois, said he could not comment on the work because he had signed a nondisclosure agreement.
Hans Cauchi, a Maltese hospitality executive who caters to the superwealthy, applied for building permits to reconstruct the stables, a ruin on the edge of the estate, into a villa with a man-made pond, and to construct a new guardhouse modeled on a rustic property built for Marie Antoinette at Versailles.
Véronique Skrotzky, who used to forage for mushrooms when the rundown old chateau stood in its place, lamented that the owner never seemed to stay there and that the property and grounds were closed to the public.
“Before it was a ruin only for ghosts,” she said. “Now it is brand-new for ghosts.”