Former board of Saudi's MMG accuses SBG for non-payment

Posted on 21st July 2016

The former board of Saudi Arabian contractor Mohammad Al-Mojil Group (MMG) has accused Saudi Binladin Group (SBG) of non-payment.

A statement released on behalf of the board, which resigned en masse last month, claimed that SBG refused to pay MMG for work that it conducted on the King Abdullah University of Science & Technology (KAUST).

MMG recorded losses of approximately $53.3m (SAR200m) for the KAUST project, according to the statement.

The document also claims that MMG sought support from Saudi Arabia’s government and Royal Court in a bid to secure remuneration from its engineering, procurement, and construction (EPC) contractors.

“Since the effects of the financial crisis took hold, and since MMG started experiencing financial difficulties, the previous board of the Mohammad Al-Mojil Group (MMG) – as well as its founder, Mr Mohammad Al-Mojil – repeatedly wrote to the Government and the Royal Courts seeking support and assistance in ensuring that MMG [received] an appropriate level [of] compensation from its principal foreign EPC contractors,” the statement read.

“One of these contractors, the Bin Laden Group, refused to pay MMG for work [it] did on the KAUST project; MMG recorded significant losses of c. SAR 200m on this project alone,” the document added.

In June 2016, the Committee for the Resolution of Securities Disputes (CRSD) – part of Saudi Arabia’s Capital Market Authority (CMA) – imposed prison sentences on three MMG executives. Founder Mohammad Al-Mojil and his son Adel Al-Mojil were each sentenced to five years’ imprisonment for misrepresenting MMG’s value. A third unnamed executive from the contractor received a three-year custodial sentence, according to news agency, Reuters.

Later that month, the MMG board resigned in its entirety, and the Al-Mojil family openly criticised the CRSD judgement, describing the ruling as “unprecedented” and “fundamentally flawed”.

In the latest statement, the former board laments the perceived lack of assistance offered to MMG by Saudi Arabian authorities, according to Constructionweekonline news report.

“It is unfortunate that MMG [was] not given the support [it] needed and the board – under pressure from the CMA’s actions and a negative defamation campaign coming from certain individuals and being covered in specific media outlets – was forced to proceed with legal and commercial negotiations with these clients,” the statement continued.

“These negotiations took a long time and were starting to bear fruit until the CMA/CRSD issued its ruling and the board left,” it concluded.

Construction Week has contacted SBG for comment, but has yet to receive a response.

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