Mohammed bin Salman hires 'disgraced' former executive as adviser
Read more: Saudi Arabia's NEOM megacity: desert destination or futuristic flop?
Kleinfeld will now leave that position to take on "wider responsibilities to enhance the economic, technological and financial development of Saudi Arabia", an official Saudi statement said on Tuesday.
In April 2017, Kleinfeld was pushed out of Arconic - part of Alcoa - after writing a "rambling" and "intimidating" letter to an investor critical of his record.
In 2007, he resigned as CEO of Siemens in the wake of a bribery probe into the company's business, but was not charged.
Kleinfeld then made his 'comeback' to the corporate world with a Saudi leap of faith, when he was chosen to lead NEOM last year.
As part of his Vision 2030 - which itself was drafted with the help of controversial Western consultants including the parent company of Cambridge Analytica - MbS has launched reform plans designed to cut the Saudi economy's reliance on oil revenues by developing other sectors, including tourism and entertainment.
But despite much fanfare, the plan has so far achieved modest results, with the Saudi economy peforming poorly amid historically low oil prices.
A much-touted public offering for Saudi oil giant Aramco that the crown prince claimed would be worth trillions of dollars has yet to materialise.
Bin Salman has coupled his plans with widely publicised moves to dilute his kingdom's harsh religious laws led by lifting a ban on women driving, but his ongoing crackdown on activists, business elite and even rival royals has left would-be investors wary of buying into his programme.
"I don't think this way of doing business will survive," said Hala Aldosari, a fellow at Harvard's Radcliffe Institute for Advanced Studies who works on women’s rights on Tuesday at the Aspen Ideas Festival, hosted by the Aspen Institute and The Atlantic.
"He antagonised a lot of people. His legitimacy is now more external than internal. He does not have the support of the people."