Chairman and son were sentenced to five years in prison for misrepresenting company’s value
The board of Mohammad Al-Mojil Group (MMG), the Saudi Arabian contractor, has announced it has resigned in its entirety with immediate effect.
The news was announced in a statement by the board and comes just days after founder Mohammad Al Mojil and his son were sentenced to five years in prison for misrepresenting the company’s value.
A third person, who was unnamed, was given a prison sentence of three years, a report by The National newspaper added.
According to the MMG board statement, the decision to resign is due in part to its “serious concerns” about the unlimited director and executive liabilities in Saudi Arabia.
“The sudden and unexpected decision by the Committee for the Resolution of Securities Disputes dated Ramadan 12, 1437 (corresponding to 18/06/2016), which was based on evidence that has been shown to be fundamentally flawed, has severely impacted on the board’s capability to deliver the company’s strategy,” it said. “These concerns have been clearly highlighted by the recent announcements by the Capital Market Authority.”
“The board maintains that at all times MMG implemented its internationally recognised accounting principles in accordance with Saudi law. Were the same international standards to be applied to other firms operating in the same sector, one would observe losses and provisions of a far greater magnitude than those seen at MMG.
“Recent events highlight the dire need for a systematic and far reaching overhaul of the construction sector in the Kingdom of Saudi Arabia as well as the regulations which govern these firms,” the statement said.
The statement added that the company had achieved a net profit in Q1 2016 for the first time since 2012, despite challenging market and company conditions.
“Substantial losses have been recuperated by this board, including the settlement of legacy contracts such as the Ibn Rushd claim which is valued at $10.6 million.
“In addition, an anticipated $253.3 million may be reclaimed, with the support the outgoing board secured from Saudi Aramco (the projects’ owner), from MMG’s work on the following projects: Karan Utilities & Co-Generation, Manifa Co-Generation & Main Substations, the King Abdullah Petroleum Studies and Research Center (KAPSARC) – Residential Package A&B & Associated Infrastructure, the Wasit Gas-Program-Inlet & Gas Processing Plant and the King Abdullah University for Science and Technology (KAUST).
“The board was influential in the preparation of a capital-restructuring plan which was to be instigated under the newly updated regulations. The plan presented a significant opportunity for MMG’s return to trading and a relisting of the company’s shares,” the statement continued, asserting that employee rights and international best practices were at ‘the heart of the company’.
“Under the board’s watch, MMG has stabilised its operations with the company’s critical suppliers. The board has resolutely defended MMG in the event of any legal action against it and the company has been winning favourable judgments for the first time in a number of claims the outgoing board brought against trade debtors. The board has acted at all times in accordance with all relevant laws and authorities.”