Saudi Arabia is taking managerial control of Saudi Binladin Group (SBG) and discussing a possible transfer of some of the giant construction group’s assets to the state while its chairman and other family members are in detention, Reuters reports today citing sources.
Binladin is the biggest builder in the country and important to Saudi Arabia’s plans for large real estate, industrial, and tourism projects to help diversify the economy beyond oil through the Kingdom’s Vision 2030 economic and social reform plans.
Trouble started for the Binladin group in 2015, when a collapse of one of its cranes in Mecca killed over 100 people. Custodian of the Two Holy Mosques King Salman, who was said to be deeply disturbed and saddened over the incident, ordered that top officials of the Saudi Binladin Group be banned from traveling outside the kingdom after investigators pinned the blame partially on the construction company. An investigative commission ruled that the company had not “respected the norms of safety,” according to Saudi Arabia’s official press agency (SPA) said. King Salman ordered SR1m each ($270k) for those who suffered permanent disability and SR500,000 ($133k) compensation for injured pilgrims.
The company was also forbidden from taking on new projects, significantly hurting its bottom line going forward and plunging the company into dire straits.
SBG was also one of the lead contractors in the construction of the planned world’s tallest building, the Kingdom Tower Jeddah, set to be over 1km tall. The company’s troubles contributed to the delay of delivery of the project until 2019. And, like several of SBG’s executives including CEO Bakr Bin Ladin, the project’s visionary, Prince Alwaleed bin Talal, is also being held on corruption charges in Saudi Arabia and has not spoken publicly since his arrest.
The government’s move to take control of SBG appears “aimed at ensuring the group can continue to serve Saudi Arabia’s development plans,” Reuters reported, citing banking and industry sources, who declined to be named due to the political and commercial sensitivity of the matter.
One source in the construction industry in Saudi Arabia told SUSTG that the takeover would ensure that back-owed salaries to employees of SBG would be paid quicker, with some of those payments already being sent. In 2016, SBG completed payment to 70,000 laid-off foreign employees as part of wider downsizing in the Kingdom.
“Although ownership of Binladin currently remains with the family, the group is in negotiations with the government about the potential transfer of some assets to the state, or possibly reducing or eliminating the government’s outstanding debts to Binladin,” the sources told Reuters.