A vast multinational construction conglomerate run by Osama bin Laden's brother and founded by his father is facing street protests over its failure to pay wages to tens of thousands of its employees for months.
On Saturday, seven buses were torched in the holy city of Mecca by non-Saudi workers who were part of the 77,000 foreign employees the Saudi Binladin Group (SBG) announced it will be sacking, almost half of its total workforce. The protests intensify pressure on the company to pay an estimated $660 million in back wages to large groups of foreign workers as well as 12,000 Saudi nationals, all of whom have been asked to "resign or wait." All employees waiting for wages have been promised a two-month bonus should they stick it out.
SBG's cash crunch is another instance of collateral damage from oil's plummeting price. The company controls 70 percent of Saudi Arabia's government-sanctioned construction projects when measured by value, and the decline in oil revenue has left the government about $100 billion in debt, according to the International Monetary Fund. The government has derived as much of 90 percent of its income from oil in recent years, and Bloomberg News reported that the government has delayed payments to contractors, though no one has confirmed whether that includes SBG.
Reuters reported that plans for large-scale construction projects, such as football stadiums and high-speed rail lines, have been put on hold. SBG is in the process of building what would be the world's tallest building — a 3,280-foot-tall skyscraper in Jiddah, the kingdom's second-largest city.
The crisis for SBG is somewhat self-inflicted, though. In September, on a busy afternoon during Friday prayers at Islam's holiest mosque, in Mecca, a crane it was operating tumbled into a crowd and killed 107 people. A government investigation found that the crane was not secured as per instructions in a manual, and the government subsequently said it would not consider bids from SBG for upcoming projects, leading to a tumble in stock prices. The company is said to be almost $30 billion in debt.
After the attacks of Sept. 11, 2001, families of several victims brought lawsuits against the company, alleging that Osama bin Laden received significant financial support from the company before he was removed as a shareholder in 1993. Bin Laden used a hefty family inheritance to help build al-Qaeda in the 1990s, but U.S. courts said they did not have jurisdiction over SBG as it did not have a unit that operated in the United States.
The current crisis is much more painful for the company, however. In an interview with MarketWatch, an unnamed creditor of SBG who works at a "major regional bank" said: "In a way, this is the government saying to them: You've become obscenely rich during the past 20 years, but for the first time, the kingdom has bigger problems to contend with."
But the construction conglomerate is so big, and controls so many of the government's projects, that it has become an essential component of Saudi Arabia's non-oil economy. It is safe to say that the Binladin Group is "too big to fail."