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Mon 8 Aug 2016 02:04 PM

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Saudi construction giant expected to file for bankruptcy

Saudi Oger grapples with financial problems as King Salman issues directive on unpaid salaries

Saudi construction giant expected to file for bankruptcy

Cash-strapped Saudi Oger is expected to declare bankruptcy amid ongoing financial problems, according to a local newspaper.

The Riyadh-based construction company allegedly owes at least seven months’ salary and other benefits to its employees after a drop in projects impacted its bottom line.

Sources quoted in the Saudi Gazette on Monday said the only way for the company to get out of its current financial predicament is to declare bankruptcy.

One source told the newspaper some employees are owed more than SR500,000 ($133,315).

Another source said Saudi Oger has failed to renew medical insurance – for which it is liable – meaning employees are no longer receiving healthcare benefits from the company.

If a company fails to pay medical insurance premiums, then the Saudi Arabian Monetary Agency (SAMA) is informed.

SAMA is then obliged to cancel a medical contract and the premiums are transferred into debts on a company, the source explained.

The news comes as Saudi Arabia’s King Salman issued a series of directives this week requiring companies to resolve all cases of unpaid salaries.

The king directed the Minister of Labour and Social Development to take necessary measures, together with the Ministry of Finance, to oblige contracting companies to pay salaries in accordance with the government’s Wage Protection Program, which aims to ensure workers’ salaries are fully paid.

More than 30,000 Saudi Oger employees lodged official complaints with the Labour Office over non-payment of wages last week, Arab News reported.

“The company can get out of its commitment to pay its dues by openly announcing bankruptcy,” said Adnan Khoja, member of the insurance committee at the Jeddah Chamber of Commerce and Industry.

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