Dubai-based developer Habtoor Leighton Group (HLG) has launched legal action against a powerful member of the Qatari royal family after his company suddenly cashed in $100m worth of performance bonds claiming unfinished work on a construction project in Doha.
HLG argues the unexpected cashing in of the bonds, which are held by a bank as security against contracted work, was “illegal and unethical”.
The developer claims it is owed more than AED1bn ($272.25m) by Sheikh Faisal bin Qassim Al Thani’s company Al Faisal Holding for completed work.
“He’s electing [instead] to cash the bonds; it’s something I consider illegal and unethical,” co-owner Khalaf Al Habtoor, who is chairman of Al Habtoor Group, told Arabian Business.
HLG, of which Australian contractor Leighton Group owns 45 percent, while the remainder is held equally by Al Habtoor and HLG chairman Riad Sadik, is one of the major developers involved in the Doha City Centre expansion.
Its $325m contract involves constructing five hotels - branded Renaissance, Marriott, Shangri-La, Rotana and Merweb – connected to the massive Doha City Centre Mall.
HLG also has built or is building numerous apartment towers in Doha under contract with Al Faisal Holding.
The developer says it has received payment and had its bonds returned on stage one of the city centre project. It also has had the bonds returned on stage two and said earlier this year it was getting the payments through on the final parts of that stage, according to The Australian newspaper.
Al Habtoor said there was no reason for Al Faisal Holding to claim the bonds.
“I’m 100 percent sure that HLG has been legitimate. No respect has been shown to the management of HLG and to the work they have done for Sheikh Faisal, unfortunately,” he said.
“This [has been] a long-term case. The HLG management team have tried their best to [operate] in a good way and with good faith to resolve this outstanding problem.”
HLG, which recorded operating losses of more than $190m last year, has reportedly been forced to pay about half the value of the bonds to Al Faisal, while half has gone into a special treasury fund established by the Doha Courts.
The company has sought a court injunction while its legal action to have payment of the bonds reconsidered goes through the court system.
Al Faisal Holding has been contacted for comment.For all the latest construction news from the UAE and Gulf countries, follow us on Twitter and Linkedin, like us on Facebook and subscribe to our YouTube page, which is updated daily.
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