Binladin Group barred from new projects in Saudi Arabia

16 September 2015

Construction giant blacklisted until crane accident investigation is completed

  • Saudi Binladin Group barred from new projects
  • Senior members of the construction giant banned from leaving the kingdom
  • Royal court directives are in place until the investigation into the Mecca crane disaster is completed

Saudi Binladin Group (SBG) has been barred from taking on new projects in Saudi Arabia until the investigation into the crane accident that killed more than 100 people at Mecca’s Grand Mosque on 11 September is completed.

The Finance Ministry will also review the Jeddah-based construction giant’s existing workload.

The directive from the royal court also bans senior members of the construction company and the Binladin family from leaving the kingdom. It is also understood that the each of the families of those killed or seriously injured in the accident will receive SR1m ($271,000) in compensation.

The investigation into the accident has not been completed. Early reports in the kingdom say the German-made mobile crawler crane that was working for SBG on the Grand Mosque expansion project had not been erected correctly. This meant it was vulnerable to the strong winds that hit the holy city on 11 September.

The move to bar SBG from taking on new work is the latest setback for the firm this year.

A letter from Bakr bin Ladin announcing his decision to step down from the helm of the kingdom’s largest and most influential construction company, was widely circulated on the internet in June. It is understood that Bakr bin Ladin has spent much of the year outside Saudi Arabia and only returned to the kingdom weeks before the Mecca crane accident.

Saleh Mohammed bin Ladin has taken over the leadership of the company, along with other family members and key executives.

The change in leadership followed growing speculation earlier in the year that SBG’s dominance of the Saudi construction sector was beginning to wane as high-level political changes were made.

In particular, there have been changes at the Royal Court, which is no longer run by Khaled al-Tuwairji. He was replaced when King Salman bin Abdulaziz al-Saud took the throne in January. These changes are said to have diminished SBG’s influence on large-scale government projects.

In April, MEED reported that the local ABV Rock had been selected by Saudi Arabia’s Interior Ministry to replace SBG on the project to build an estimated SR12bn medical city in Jeddah.

SBG had been awarded the construction contract in 2013, but its deal was cancelled, with the ministry turning to ABV Rock to build the medical facility. It remains unclear why Binladin’s contract was cancelled.

Founded in the 1930s, SBG has enjoyed a leading market position in the Saudi construction sector for decades. According to regional projects tracker MEED Projects, it currently has nearly $33bn of work at the execution stage, which is almost the same as the $34bn of work held by the next nine busiest contractors in the kingdom combined.

While government influence has been a key component of SBG’s success, massive domestic resources have also given it the edge as there are few other contracting companies in Saudi Arabia that have the capacity to take on such large contracts. More than $28bn, or 85 per cent, of its order book is from government-backed deals valued at more than $1bn. The largest is a $4bn contract for the construction of the new airport terminal at King Abdulaziz International airport in Jeddah.

The Binladin family was also struck by a family tragedy when three family members were killed in an air crash in the UK on 31 July. The private jet, which was travelling from Milan, crashed as it landed at Blackbushe airport in Hampshire, killing the pilot and all three passengers. The aircraft is reported to have belonged to an aviation firm owned by the Binladin family.

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