The Cimic Group Ltd (ASX: CIM) share price showed its resilience today. This comes after reports the company has underpaid hundreds of its workers at its Middle East operations.
At the close of trading, the engineering company's shares were flat at $22.00 apiece.
Image source: Getty Images
What happened?
The Cimic share price stood firm today amid fresh accusations over an alleged wages scandal that first surfaced last year.
It involves claims the company short-changed workers, subcontractors, and banks in the United Arab Emirates, Oman, and Saudi Arabia.
According to an article published in The Age, Cimic could face criminal prosecution as it's accused of owing $500 million.
A judicial guard appointed as administrator of Leighton Contractors Qatar (LCQ), Fatima Almass Al-Hamad, said, "the situation is a humanitarian disaster".
In 2018, LCQ was formed following the merger of the Qatari building contractor Al Habtoor Engineering with Gulf Leighton, the CIMIC Group's original operating company in the Gulf region. However, in 2020, the company went into receivership.
Al-Hamad said, "With no salary and no health insurance, the workers are struggling to survive and cannot support their families".
LCQ is currently being investigated by the administrator over a number of alleged breaches of Qatari legislation.
Cimic refutes the allegations made and claims all employee entitlement payments were honoured up until its exit from the Middle East and Dubai-headquartered BIC Contracting (BICC).
Last year in February, the company signed a share purchase agreement with SALD Investment LLC. The deal saw Cimic sell its 45% non-controlling interest in BICC for "nominal" consideration.
Cimic stated it would re-focus its efforts on major markets including Australia, New Zealand, and the Asia Pacific.
Management noted that since February 2021, around 40 people (equivalent to 2%) remain unpaid in the UAE and Saudi Arabia. Payment is expected soon, as soon as settlements are reached between BICC and the employees.
Cimic share price snapshot
Over the last 12 months, the Cimic share price has gained roughly 10%. It is also up 30% year to date.
The company's shares reached a 52-week high of $22.42 last month following a takeover approach by Hochtief Australia.
Cimic commands a market capitalisation of close to $6.85 billion at today's prices.
