Revealed: Saudi Oger set to file for bankruptcy
Saudi Oger has been hit hard by a slowdown in the Saudi construction sector due to low oil prices and state spending cuts
Saudi contractor Saudi Oger Ltd. is expected to declare bankruptcy to get over its acute finical problems, after it was unable to pay salaries and renew medical insurance for its 20,000 employees for the past eight months.
The Riyadh-based construction company failed to pay financial dues to medical insurance companies, resulting in the stopping of insurance to its employees, a Saudi Oger source, who did not want to be identified told local newspaper Saudi Gazette.
“The problem is not only with medical insurance, but also with the end of service benefits. Some employees are entitled to more than $133,313 (SAR500,000),” he said.
The company is liable to pay medical insurance and the fees of the General Organization for Social Insurance (GOSI), said a number of economists and lawyers. The only way for the company to get out of its present financial predicament is to declare bankruptcy, they said.
Adnan Khoja, member of the insurance committee at the Jeddah Chamber of Commerce and Industry (JCCI), told the newspaper: “The company can get out of its commitment to pay its dues by openly announcing bankruptcy. If a company fails to pay medical insurance premium, then the Saudi Arabian Monetary Agency (SAMA) — which is responsible for monitoring insurance companies — is informed.
"The Council of Cooperative Health Insurance (CCHI) unusually intervenes when a private company fails to pay medical insurance premium for its employees. When SAMA cancels a medical contract, the premiums are transferred into debts on a company," added Khoja.
Oger has been hit hard by a slowdown in the Saudi construction sector due to low oil prices and state spending cuts, and wage payments to thousands of its workers have been delayed for months, according to Saudi media and the workers themselves.
A Lebanese newspaper quoted unnamed sources as saying that talks between Hariri and the Saudi government were in their final stages.
More than 30,000 Saudi Oger workers have filed official complaints with the Labour Office over alleged non-payment of wages few days back.
The 31,000 Saudi and foreign workers claimed their salaries have been delayed for several months, Arab News had reported.