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Report: Hariri's financial empire is collapsing

Prime Minister of Lebanon, Saad Hariri in Sochi, Russia on 13 September 2017 [Kremlin Press Centre/Anadolu Agency]
Prime Minister of Lebanon, Saad Hariri in Sochi, Russia on 13 September 2017 [Kremlin Press Centre/Anadolu Agency]

The construction empire of Lebanese Prime Minister Saad Hariri is crumbling according to a report in the Wall Street Journal (WSJ)

Hariri’s political career and his business empire have been built on decades of support from the Saudi royal family. Both are now said to be collapsing.

Saudi Oger Ltd, the company owned by the Hariri family, closed its operations in the Kingdom this summer after the Saudi royal family cut spending on large construction projects. The company, reported WSJ, now relies on the Saudi government to pay millions of dollars in wages owed to former employees.

The precarious situation of Hariri’s business empire is suggested to be intertwined with the announcement of his recent resignation in Riyadh.

The Saudi Kingdom’s influence on the Hariri family stretches back to the 1980s when Rafic Hariri – father of Saad Hariri – made his fortune after moving to Saudi Arabia from Lebanon as a teenager. Saudi Oger, the company he founded, quickly grew into a multi-billion dollar business, due to large contracts awarded by the Saudi royal family. The construction firm supported the entire Hariri financial and political empire.

Rafic Hariri returned to Lebanon as a wealthy man, entered politics, becoming prime minister for the first time in 1992 and used his wealth to fund his campaign, while the support he received from the Saudi royal family helped build his support base among the Lebanese Sunni community.

Read: Hariri: I would like to remain prime minister

Following his assassination in 2005, Saad Hariri took on the responsibilities of his father’s political and business duties.

Mohammad Bin Salman Al Saud, Crown Prince of Saudi Arabia [en.kremlin.ru]

Mohammad Bin Salman Al Saud, Crown Prince of Saudi Arabia [en.kremlin.ru]

Analysts believe the political influence enjoyed by Hariri stems mainly from his long standing relations with Saudi Arabia. According to the WSJ, bankers who worked with the firm said the problems facing Hariri’s business began nearly three years ago, as the Kingdom began to deal with the impact of lower oil prices on public finances.

Problems began to mount for the Hariri empire after Saudi Crown Prince Mohammed Bin Salman tightened spending to deal with the recession. The measures he introduced impacted the multi-billion dollar construction projects, including those overseen by Saudi Oger.

Saudi Oger struggled to pay the salaries of thousands of its employees including senior French businessmen. According to the WSJ, Hariri repeatedly told French diplomats that his company is working to pay late salaries. The French ambassador to Saudi Arabia is even said to have written a strongly worded letter to Hariri in June 2016 demanding payment.

At this point the Saudi government intervened and paid the French employees the equivalent of nine months’ wages, which cost the Kingdom millions of dollars, according the WSJ report.

Saudi Oger’s problems don’t end there. In 2016, the Saudi Ministry of Finance demanded documents from the company about its spending practices. Bankers who worked for the company say they put forward different scenarios to save it. The WSJ also said that Saudi Oger sold its stake in a Jordanian bank for about $ 1 billion to raise funds.

LebanonMiddle EastNewsSaudi Arabia
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