Saudi state takes managerial control of Binladin group- Kingdom’s construction giant

Saudi officials are trying to negotiate settlements with detainees, saying they aim to claw back some $100 billion of funds that rightfully belong to the state. The talks on Binladin’s future are part of this effort, the sources said.

BE2C2 Report– Saudi Arabia is taking managerial control of Saudi Binladin Group 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, report Reuters citing sources.

It however remains a privately owned conglomerate owned by its shareholders– the renowned bin Laden family.

statement published by Arab News on Saturday said the Saudi Bin Laden Group Company (SBG) has asserted that it remains a private sector company owned by its shareholders.

“Based on information available to the management, some of the shareholders may have agreed a settlement that involves transferring some SBG shares to the goverment of Saudi Arabia against outstanding dues,” the statement added.

According to the reports, the SBG’s new management committee includes three government representatives: Abdulrehman al-Harkan, a former chief executive of Saudi property company Dar Al Arkan, and Khaled Nahas, a board member of petrochemical producer Saudi Basic Industries Corp. There are also two family members on the committee: Yehia Bin Laden and Abdullah Bin Laden.

Previously, the family was in total control of the group, with Bakr Bin Laden taking most decisions, the sources said.

Binladin, which had over 100,000 employees at its height, is the biggest builder in the country– SBG performs majority of  portioof government projects on cost-plus basis, and important to Riyadh’s plans for large real estate, industrial and tourism projects to help diversify the economy beyond oil.

However, the group has been hurt financially in the past couple of years by a slump in the construction industry and a temporary exclusion from new state contracts after a crane accident killed 107 people at Mecca’s Grand Mosque in 2015. It was forced to lay off thousands of employees.

Riyadh’s move to take control appears aimed at ensuring the group can continue to serve Saudi Arabia’s development plans, said banking and industry sources to the news agency, who declined to be named due to the political and commercial sensitivity of the matter.

The government detained scores of senior officials and businessmen in October as part of a sweeping crackdown on corruption. The Binladin group’s chairman Bakr Bin Laden and several family members have been held, the sources said.

Saudi officials are trying to negotiate settlements with detainees, saying they aim to claw back some $100 billion of funds that rightfully belong to the state. The talks on Binladin’s future are part of this effort, the sources said.

Since the detention of Bin Laden family members, the five-member committee, which include three government representatives, is overseeing the group’s business and handling relations with suppliers and contractors, the sources said.

Binladin executives did not respond to Reuters phone calls seeking comment. Finance ministry officials and the government media office also did not respond to requests for comment.

Setting a precedent?

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 said.

One banking source with detailed knowledge of the group said the debt might total around $30 billion – the legacy of a period about 18 months ago when the government held off from settling many of its debts as its finances were hurt by low oil prices.

It is not clear whether the government’s handling of Binladin may set a precedent for the cases of other businessmen detained in the corruption purge.

They include one of the kingdom’s most prominent businessmen, Prince Alwaleed bin Talal, who is chairman and owner of global investment firm Kingdom Holding. Because of Binladin’s strategic importance to the construction industry and development projects, as well as its financial struggle, it may be treated differently from the assets of other detained suspects, the report said.

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