Saudi Bakr bin Laden: A great tumble for the builder of worlds’ tallest tower
It’s not just Prince Alwaleed Bin Talal who is being detained and awaiting release in relation to a November 2017 Saudi corruption probe.
72 year old Bakr Bin Laden, the chairman of the once No.1 construction conglomerate in Saudi, Saudi Bin Laden Group (SBG), builder of the tallest tower in the world, the 1km high Jeddah Tower, is still in cushioned custody at the Ritz Carlton, held on corruption charges.
Quite a reversal of fortunes for a person once described as ‘the true ruler of Jeddah’, according to reports by the DailyMail, and German Der Spiegel, and whose infamous half-brother is Osama Bin Laden.
What might reveal reasons behind the arrest?
Size and stature
Whereas once the SBG name would be synonymous with large and expensive construction projects, the company was not mentioned as potentially being part bidders of the $500bn NEOM or the 50 virgin Islands off the Red Sea coast, the newest Saudi projects launched by Saudi Crown Prince Mohammed Bin Salman.
SBG in 2011 signed a $1.23 billion contract to build the tallest building in the world, Jeddah Tower.
It was involved in a nearly $1bn contract to design and build 30 parcels in King Abdullah Financial District (KAFD), in Jeddah.
Among its various national and international projects, the company has been involved in the $23bn expansion of the Holy Mosque in Mecca, the $3.2bn Jabal Omar development in holy Mecca, the construction of the $2.3bn Jeddah’s King Abdulaziz International Airport, and works in the $8.27bn King Abdallah Economic City (KAEC).
Bakr resigns in protest
In a letter dated 5 May, 2015, addressed to senior members of the Bin Laden family, SBG’s Bakr Bin Laden, relinquished control of the company to director, Saleh Mohammed Bin Laden, asking him to be selective in SBG’s choice of future projects, in a message intended to reflect his dissatisfaction with company government projects and related to delayed payments.
He warned: “Dear brother [Saleh Mohammed Bin Laden]. You need to concentrate on preserving the rights of the group [SBG], both in terms of documentation and in calling for legal restitution, while preserving our good reputation in the process. You also need to be sure of the business feasibility of future projects, from every aspect, before you give your blessings on them and thus the group’s commitment to execute them.”
Months later, Bakr resumed control of the company.
In 2016, SBG laid off more than 70,000 workers after labour unrests stemming from the company’s failure to make salary payments over months.
That year, at the peak of the oil price crisis, new project awards had also been considerably lower, with MEED reporting that contract awards for 2016 “at best” are likely to total $120bn, or 32% lower than the $177bn awarded in 2015. By mid-December, contract awards for 2016 stood at just $96bn.
In February 2017, Reuters reported that Saudi Binladin Group (SBG) has received anywhere from $640 million to almost $1bn from the government to settle debts since the start of this year, for its work on state projects including the King Abdulaziz International Airport in Jeddah.
“Sources told Reuters earlier this month that creditors had agreed in principle to a request by SBG for a two-year extension on a 10 billion riyal ($2.7bn) Islamic credit facility used to finance its building work at the Grand Mosque in Mecca,” said Reuters then.
According to Argaam, SBG has accumulaed an estimated debt of $30bn owed to local and international banks, a company that at one point was in charge of 15 projects at home and abroad worth about $38bn.
Crane tower crash
In September 2015, SBG’s work at the Grand Mosque expansion was suspended pending an investigation into a Mecca crane crash during a dust storm that killed 107 worshippers, and led to SBG being sanctioned from any immediate public contracts.
At the time, Reuters reported that the “…disaster, which came days before the annual haj pilgrimage in the city, was embarrassing to the country’s ruling Al Saud.”
In January 2017, the case against 13 SBG employees was dismissed, but the damage had already been done.
In August 2017, Reuters reported that SBG will restart work the following month on the expansion of the Grand Mosque in Mecca, nearly two years after work stopped.
“Its plan to restart construction at the Grand Mosque is a fresh sign of the rehabilitation of Saudi Binladin, which was temporarily banned from winning new state contracts after the crane collapse and has been damaged financially by a deep slump in the construction sector,” said Reuters at the time.
“Another stalled government project in which Saudi Binladin is involved, the $3.5bn construction of the Abraj Kudai hotel complex in Mecca, will restart in coming months,” sources told Reuters earlier that week.
The Qatar connection
Having been accused of financing terrorism, Qatar today is on the wrong side of a quartet of countries led by Saudi, UAE, Bahrain and Egypt.
SBG has a $3.4bn agreement to construct the Doha Metro by 2019, and in March 2010, the firm joined together with Qatari Diar to launch a joint venture holding company which will carry out mega contracting and construction works in Qatar and elsewhere.