Reports said detained Saudi princes and billionaires are being strung up by their feet and beaten by American private security contractors.
About 201 people are being detained at the Ritz-Carlton in Riyadh on the orders of the Crown Prince Mohammed bin Salman's anti corruption committee.
The group of detainees reportedly includes military officials and government ministers as well as 11 princes - among them Prince Alwaleed bin Talal whose $US10 billion fortune makes him the 10th richest man on the planet.
Construction tycoon Bakr Bin Laden, billionaire Saleh Kamal and Waleed al-Ibrahim, owner of the influential Arab satellite network MBC, are also believed to be in detention at the hotel.
A source reportedly told the Daily Mail that the group has since been subjected to "interrogations" carried out by "American mercenaries" brought in to work for the Crown Prince, 32, who is now the kingdom's most powerful figure.
"They are beating them, torturing them, slapping them, insulting them. They want to break them down," the source told the site.
The Daily Mail alleged 'Blackwater' was the security firm involved. But the organisation's successor, Academi, strongly denied even being in Saudi Arabia and said it does not engage in torture, which is illegal for US citizens to commit anywhere in the world.
"We do not provide security services in KSA (Kingdom of Saudi Arabia), we have no contact or connection with any government official or private party regarding this allegation," the company said.
Investigators said at least $100 billion has been uncovered in the corruption probe. The detainees include Cabinet ministers, members of the royal family and the owners of three TV networks that are among the largest in the Middle East.
The crackdown that began on November 4, initially targeted 11 princes, 38 officials, military officers as well as business leaders. An estimated 1700 individual bank accounts have been frozen.
They have been held in lavish hotels across the country as the crown prince leads and investigation of a newly formed anti-corruption committee.
Pictures obtained by the Mail Online purport to show dozens of people held in the function room of the Ritz Carlton hotel. The source claimed the Crown Prince has hired private contractors rather than rely on Saudi officers who may have split loyalties.
"[Mohammad Bin Salman] He speaks to them very nicely in the interrogation, and then he leaves the room, and the mercenaries go in. The prisoners are slapped, insulted, hung up, tortured."
The comments come following fears the lack of a legal defence for those being held amounts to "nothing other than a shakedown," according to human rights watchers.