The collapse of a building contractor with major operations in the region has left thousands of workers stuck on sites in Saudi Arabia and other parts of the region without pay.
Joannou & Paraskavevaides (Overseas) Ltd collapsed last month, and although this firm only employed 957 employees directly, there are 16,350 people employed in subsidiaries across the region that are still owned by it.
A letter claiming to represent 5,000 of these employees based in Saudi Arabia, which has been seen by Zawya, has been sent to the directors and management of the collapsed company and its local subsidiary, J&P (Saudi Arabia) Ltd, stating that many of them have been without pay for five months, and that they are owed up to two years' worth of benefits. Others are owed much longer end of service packages, having worked for the company for decades.
The letter claims that the 5,000 employees are owed a total of up to 125-150 million Saudi riyals ($33.3-$40 million), but that they have been informed by management of the Saudi Arabian subsidiary that its "accounts are exhausted and they are unable to pay our salaries and other dues".
It said that many workers felt "imprisoned" on company camps in the country because many of them are now without residency or work permits and therefore cannot leave the country. The letter was sent to directors of the company, to the kingdom's Ministry of Labor and Social Development and to various embassies of nationalities affected.
Joannou & Paraskavevaides (Overseas) Ltd (J&P Overseas) was set up in Guernsey in 1961 by the founders of Cyprus-based Joannou & Paraskavevaides Group.
J&P Overseas expanded across the whole of the Middle East and North Africa region and over the past decade it has carried out some sizeable projects across the Gulf. It was part of a consortium building the 40,000-seater Qatar Foundation stadium, one of eight being built for the Fifa 2022 World Cup in Qatar, and, according to a company brochure, it was appointed to build two phases of a project for the Saudi Arabian military known as the King Abdullah Bin Abdul Aziz Project for Development of Security Facilities which had a combined contract value of over $2.1 billion.
However, according to a statement from liquidators sent to Zawya, the group "faced significant liquidity issues and was cash flow insolvent".
Interim administrators were appointed to J&P Overseas by a Guernsey court on October 16 with a view to securing funding for an administration process, but when it became clear these funds couldn't be secured the firm was placed into compulsory liquidation on October 24, with Richard Fleming, Mark Firmin, Ben Cairns and Carl Bowles of financial services firm Alvarez & Marsal (Europe) appointed as joint liquidators.
In total, J&P Overseas and its subsidiaries employed 16,350 people, of which 957 were employed solely by J&P Overseas. The statement from the liquidators said that it has only been appointed to handle the affairs of J&P Overseas, and that the individual subsidiaries were still being run by their directors, although it owns the majority stakes in them.
All of the employees working directly for J&P Overseas had contracts terminated once liquidators were appointed, although 10 have been re-hired to help with the winding down of the company.
The statement from the liquidators said that it was in the process of appointing a third-party advisor "to sell the subsidiary shareholdings that have value", adding that these could be of interest both to trade and international buyers.
It also said that it was aware of the letter sent by employees of the Saudi subsidiary, and that it was "concerned at the conditions faced by workers in Saudi Arabia", but pointed out that the vast majority of these were employed by J&P (Saudi Arabia). Therefore, they do not fall under its remit.
J&P (Saudi Arabia) and the kingdom's Ministry of Labor and Social Development were contacted by Zawya, but did not respond to requests for comment.
J&P Avax, a company headquartered in Greece chaired by Christos Joannau and listed on the Athens Stock Exchange, said in a statement last month that although it had been working on a number of joint ventures in the Gulf with J&P Overseas, it did not expect the appointment of administrators to the latter "to materially affect’ its own activities.
The statement said the relationship between the two firms was "limited to specific collaborations" on joint ventures in the Gulf, and that appropriate measures had been taken with banks and clients that would allow these project to continue without any interruptions.
(Reporting by Michael Fahy; Editing by Shane McGinley)
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