DUBAI (BLOOMBERG) - The mysterious disappearance of a prominent Saudi government critic is prompting some company leaders to back away from the "Davos in the Desert" event intended to showcase Prince Mohammed bin Salman's modernisation plan for the desert kingdom.

Turkish officials allege Jamal Khashoggi, a Washington Post columnist who lived in self-imposed exile, was murdered in the kingdom's consulate in Istanbul after entering the building on Oct 2.

They now say they have audio and video recordings that show a Saudi security team detained Mr Khashoggi in the consulate before killing him and dismembering his body, the Washington Post reported.

Saudi officials say Mr Khashoggi left the building unharmed.

The affair is eclipsing the three-day Future Investment Initiative, scheduled to start in Riyadh in just two weeks.

Billionaire Richard Branson sees the case as a potential game-changer for companies doing business with Saudi Arabia, halting Virgin Group's talks for the Saudi sovereign wealth fund to invest in a space venture.

Confirmed drop-outs now include: Viacom Inc CEO Bob Bakish; Uber Technologies CEO Dara Khosrowshahi - who won't attend "unless a substantially different set of facts emerges"; Venture capitalist Steve Case - pending "further information"; Los Angeles Times owner Patrick Soon-Shiong; and HP executive Joanna Popper.

The event, unofficially tagged with the "Davos" title, features chief executives like Siemens AG's Joe Kaeser - whose engineering behemoth is a "strategic partner" for the conference - and BlackRock's Larry Fink.

The gathering is co-hosted by the kingdom's massive sovereign wealth fund, the Public Investment Fund, and the crown prince, who gave a speech at the event last year and took selfies with attendees.

Uber got a US$3.5 billion (S$4.8 billion) investment from the PIF two years ago.

But Saudi Arabia's premier investment event is now being overshadowed.

President Donald Trump, who has forged a close relationship with the Saudi rulers, has said the US is investigating the case and lawmakers have threatened to take action against the kingdom. Mr Trump said he's disinclined to block arm sales to the Saudi government, as senators in his own party have suggested.

"We are closely monitoring the situation," Brian Beades, a spokesman for the US asset-management giant BlackRock, said when asked whether Mr Fink still planned to attend.

A year ago, BlackRock's CEO was one of the attendees, publicly praising the direction of the Saudi economy.

The firm received local arranging and advising licenses earlier in 2018.

Speakers booked include JPMorgan Chase CEO Jamie Dimon. The US bank declined to comment on whether Mr Dimon still plans to attend.

The CEOs must strike a balance between "the reputational risk they run by being associated with what seems to be very disturbing developments" and "their long-term business interest" in Saudi Arabia, according to Richard LeBaron, a former US ambassador to Kuwait who is now non-resident senior fellow at the Atlantic Council.

Siemens' head of financial media relations, Philipp Encz, said that for now there are no changes to Mr Kaeser's plans, but the company is "following the situation closely."

The New York Times, which was a media sponsor of the conference, has pulled out. CNN announced on Friday (Oct 12) that it's withdrawn its participation, while the Financial Times said it wouldn't partner with the event while Mr Khashoggi's disappearance remains unexplained.

Bloomberg has also pulled out of the event as a media partner, a spokesman said.

Part of Prince Mohammed's plan to overhaul the Saudi economy is an attempt to attract foreign direct investment into the kingdom.

In an interview with Bloomberg last week, he said the event would see the sealing of a major investing agreement in the non-oil economy.

Other "strategic partners" for FII include HSBC Holdings and Credit Suisse Group, while consulting firms Deloitte, Boston Consulting Group and McKinsey are listed as "knowledge partners."

Technology figures slated to attend the conference include venture capitalist Jim Breyer and Google executive Diane Greene.

Spokespeople at those firms didn't respond to requests for comment.

US Treasury Secretary Steven Mnuchin is still planning to attend, as is Moelis's Ken Moelis, a representative for the boutique investment bank said.

It's not the first time controversy has overshadowed the FII event.

Scores of the kingdom's businessmen, princes and officials were rounded up in the Ritz-Carlton hotel just days after last year's conference in what the government described as a crackdown on corruption.

Last year, Prince Mohammed used the FII to unveil plans for Neom, a US$500 billion high-tech mega city. The venture attracted former US Energy Secretary Ernest Moniz to its advisory board. Mr Moniz has suspended his involvement until more is known about Mr Khashoggi's fate, Axios reported.

Sam Altman, president of tech incubator Y Combinator, is conferring with US officials and is leaning toward suspending his involvement with the Neom board, said a person familiar with the matter, who asked not to be identified because the deliberations are private.

Mr Branson suspended talks with the PIF over a possible stake in his space companies Virgin Galactic and Virgin Orbit, he said, adding that he also was suspending his directorships in Saudi Red Sea tourism projects.

"What has reportedly happened in Turkey around the disappearance of journalist Jamal Khashoggi, if proved true, would clearly change the ability of any of us in the West to do business with the Saudi government," he said.

Steffen Hertog, an associate professor at the London School of Economics, said the CEOs of companies with a strong corporate and social responsibility profile, especially US tech companies, "must now be weighing reputational risks differently."

"Saudi Arabia is an important market, but it is not as important as, say, China, so it is less costly to make a public stand on political grounds," he said.