Saudi Oger owes SR3bn ($800m) to its employees in salaries in addition to the payments due to contractors and exporters, and money it requires to service loans obtained from local and international lenders.
French employees of the company, who have not been paid in months, have sued the company in French courts. Talks between a lawyer representing 200 employees, mainly engineers and managers of the companys projects in Jeddah, Riyadh, and Dammam, have failed, the local daily Arab News cited French media reports as saying.
Saudi Oger, which is facing severe cash flow issues due to a delay in payments from the government, offered to clear employees dues of up to five months only, but the lawyer rejected the offer, the report added.
Meanwhile, the French embassy in Riyadh has been giving financial aid to the French employees of the company to help them meet expenses, including their childrens school fees until the issue is resolved, Arab News reported.
Frances Foreign Minister Jean Marc Ayrault, who recently visited Lebanon, said his government was communicating with officials in Saudi Arabia and at the company to resolve the issue.
Riyadh is facing pressure from several countries on non-payment of wages to their nationals employed in its construction sector. India has already sent its state minister, Vijay Kumar Singh, to the kingdom. Singh held negotiations last week with Saudi Labour and Social Development Minister Mufrej al-Haqabani for the return of 2,500 employees of Saudi Oger back to India.
Subsequently, Saudi Arabias King Salman bin Abdulaziz al-Saud directed the authorities to take measures to resolve issues faced by the stranded Indian workers.
What happened was an individual act by one company that did a mistake, Arab News cited Al-Haqabani as telling reporters after his talks with Singh.
We have agreed with Saudi Arabian Airlines to send back any Indian worker who wants to leave, Al-Haqabani said on 3 August in Jeddah, adding that Saudi Arabia will also appoint lawyers at its own expense to follow up on the workers financial claims in courts against their employer in order to ensure the unpaid salaries and financial dues are fully settled.
The minister has also issued orders to allow transfer of sponsorship and renew the residence permits of Indian workers. Restrictions have also been eased on workers leaving the kingdom, according to the report.
Lebanons Al-Akhbar on 3 August reported that the Saudi government is also looking at taking over Saudi Oger, which is owned by the family of Lebanons former Prime Minister Saad Hariri.
The newspaper added that the buyer would take over all the debts and financial obligations of Saudi Oger.
The decline in oil prices has severely affected Saudi Arabias construction market. There were $4.5bn of contract awards in the kingdom during the first half of this year, down 77 per cent from the $19.9bn awarded in the first half of 2015.
Many contractors in the kingdom have faced financial difficulties amid payment delays, which has resulted in the laying off of thousands of employees. Saudi Binladin Group has laid off about 70,000 of its 200,000 workers, with local media suggesting Oger has let go of up to 30,000 employees.