London:  When Saudi King Abdullah arrived home last week, he came bearing gifts: handouts worth $37 billion (Dh135.88 billion), apparently intended to placate Saudis of modest means and insulate the world’s biggest oil exporter from the wave of protest sweeping the Arab world.

But some of the biggest handouts over the past two decades have gone to his own extended family, according to unpublished American diplomatic cables dating back to 1996.

The cables obtained by WikiLeaks provide insight into how much the royal welfare programme has cost the country - not just financially but in terms of undermining social cohesion.

Other schemes

Besides the huge monthly stipends that every Saudi royal receives, the cables detail various money-making schemes some royals have used to finance their lavish lifestyles over the years. Among them: siphoning off money from "off-budget" programmes controlled by senior princes, sponsoring expatriate workers who then pay a small monthly fee to their royal patron and, simply, "borrowing from the banks, and not paying them back."

As long ago as 1996, US officials noted that such unrestrained behaviour could fuel a backlash against the Saudi elite. In the assessment of the US embassy in Riyadh in a cable from that year, "of the priority issues the country faces, getting a grip on royal family excesses is at the top."

A 2007 cable showed that King Abdullah has made changes since taking the throne six years ago, but recent turmoil in the Middle East underlines the deep-seated resentment about economic disparities and corruption in the region.

A Saudi government spokesman declined to comment.

The November 1996 cable entitled "Saudi Royal Wealth: Where do they get all that money?"- provides an extraordinarily detailed picture of how the royal patronage system works. It’s the sort of overview that would have been useful required reading for years in the US State department.

It begins with a line that could come from a fairytale: "Saudi princes and princesses, of whom there are thousands, are known for the stories of their fabulous wealth - and tendency to squander it."

The most common mechanism for distributing Saudi Arabia's wealth to the royal family is the formal, budgeted system of monthly stipends that members of the Al Saud family receive, according to the cable.

Managed by the Ministry of Finance's "Office of Decisions and Rules", which acts like a kind of welfare office for Saudi royalty, the royal stipends in the mid-1990s ran from about $800 a month for "the lowliest member of the most remote branch of the family" to $200,000-$270,000 a month for one of the surviving sons of Abdul Aziz Bin Saud, the founder of modern Saudi Arabia.

Grandchildren received around $27,000 a month, "according to one contact familiar with the stipends" system, the cable says. Great-grandchildren received about $13,000 and great-great- grandchildren $8,000 a month.

"Bonus payments are available for marriage and palace building," according to the cable, which estimates that the system cost the country, which had an annual budget of $40 billion at the time, some $2 billion a year.

After a visit to the Office of Decisions and Rules, which was in an old building in Riyadh's banking district, the US embassy's economics officer described a place "bustling with servants picking up cash for their masters".

The office distributed the monthly stipends - not just to royals but to "other families and individuals granted monthly stipends in perpetuity". It also fulfilled "financial promises made by senior princes".