NGO's softly-softly tactics tackle labor abuses at Malaysia factories


The 18-month investigation unearthed serious abuses at five apparel factories in Malaysia – hundreds of migrant workers had paid illegal recruitment fees that sometimes exceeded a year’s pay, while four of the factories retained the workers’ passports, turning them into forced laborers unable to quit.

Some migrant workers – many from Bangladesh, Nepal and Indonesia – said recruiters had promised wages twice what the Malaysian factories paid them. Some complained their companies had them sleep 28 to a single bedbug-infested room while sharing one toilet.

But in an unusual twist, when the investigators for Transparentem, a New York-based non-profit that investigates labor and environmental abuses, uncovered these problems, it didn’t rush to publicize them and shame those factories’ western customers, which included Target, Nike and Fruit of the Loom. Instead, Transparentem’s founder, Benjamin Skinner, adopted an unorthodox strategy: reaching out privately at first.

Transparentem’s leaders had seen in the past that when investigators uncovered horrible conditions in Asia, the embarrassed western customers often hurried to terminate their relationship with the suppliers and then did little to fix the abuses.

So when Transparentum uncovers serious problems, instead of rushing to publicize them and spotlight those factories’ western customers, the group quietly informs those companies and asks them to work with the factories to fix the problems. Behind this is the knowledge that Transparentem will disclose its investigative findings and how companies responded – and western companies know they will look bad if they don’t act.

Transparentem presented its findings on the Malaysian apparel factories to 23 western companies, and 15 of them agreed to help remediate the five factories: Honsin Apparel, Whitex Garments, Perindustrian Shunhon, SP Garments and Knit Textile Manufacturing.

The western companies got four of the factories to stop using recruiters who demanded illegal fees. They also got them to repay nearly $1.8m in recruitment fees to more than 2,500 workers. Transparentem said SP Garments didn’t respond to its findings.

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In an important victory for Transparentem, soon after it sent its Malaysia report to companies last October, the American Apparel and Footwear Association – which includes Nike, Gap, Ralph Lauren and 120 other companies – announced a new policy on “responsible recruitment” that requires “supply chain partners” to make sure no workers pay recruitment fees and “workers retain control of their travel documents and have full freedom of movement”.

“There’s the traditional name-and-shame model – the tradition that you expose as soon as you have the evidence,” said Skinner, who used to work as a journalist whose focus was investigating human trafficking.

“We’re not trying to take a blowtorch to the apparel industry. We’re trying to say to brands you have a real responsibility here. You have real power here. We want to give you a real opportunity to use that power when you’re under intense pressure to stop doing business with a supplier that has problems. We want to give brands a grace period that gives them an opportunity to do the right thing.”

The International Labor Organization says that Malaysia has up to 4 million migrant workers, representing 20% to 30% of the nation’s workforce. In 2017, Malaysia exported $3.6bn in textiles and apparel, with the United States Department of Labor placing Malaysia-made garments on its list of goods produced with forced labor.

Skinner said Transparentem decided to investigate Malaysia’s apparel industry because other investigations had already uncovered forced labor in its electronics industry and its palm oil industry.

Transparentem found the recruitment fees for the Malaysian factories ranged from $745 to $4,356. Many migrants said they borrowed from banks or relatives, mortgaged land or sold their homes or livestock to pay the fees. Transparentem wrote: “Some workers said it took years for them to repay loans, placing them at risk of debt bondage.”

Some factories gave passports back to workers only if workers first put down a deposit of three months’ pay. “The company fears that we will run away if we get to keep our passports,” one worker said. Sixty percent of the workers Transparentem interviewed said recruiters had deceived them about their future pay and the nature of the work promised.

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Transparentem praised two athletic wear companies, Brooks Sports and Tracksmith, for their role at Perindustrian, where some workers said recruitment fees were so high it took two years to pay off any loans. Brooks paid a portion of the costs to reimburse Perindustrian’s workers even though it had stopped buying from those companies. Tracksmith, a customer of Perindustrian at the time of Transparentem’s investigation, also contributed to the reimbursements. Transparentem’s report said: “Despite having no authorized sourcing relationship with Perindustrian Shuhan, Brooks Sports took a leadership role in organizing buyers” to fix the factory’s problems and reimburse workers.

Dan Sheridan, Brooks’ chief operating officer, said: “After Transparentem’s work revealed unacceptable findings in a factory which was not authorized to produce our product, we took action to improve conditions for workers there.” Sheridan added. “It is our hope that this investigation can be a catalyst for change, not only in Malaysia, but for any country that receives foreign migrant labor.”

Transparentem also praised Primark and Target, noting that even though they had stopped sourcing from the Whitex factory, those two companies took leadership roles in assuring improvements there, including illegal recruitment fees and retaining passports. Primark commissioned an audit of the factory, and both helped make sure Whitex ended recruitment fees and stopped withholding passports.

Transparentem wrote that Nike had helped address recruitment fees and other problems at the Honsin factory, but it faulted Nike for not doing more at SP Garments and its Hing Yiap factory, which a Nike sublicensee had used. Nike insisted that it didn’t even use any of SP’s factories and that the sublicensee used the Hing Yiap without its authorization or knowledge. Nonetheless Nike said it had approached SP’s owner about making improvements.

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Cimarron Nix, Nike’s director of labor, sustainable manufacturing and sourcing, said Nike had identified the problems at the Honsin factory months before Transparentem did. Nix said: “We have no relations with SP Garments” and “we are not in a position to have legal or other leverage.” “We are deeply engaged in respecting human rights across our supply chain,” Nix continued. “It is a journey of continuous improvement.”

But Skinner asked why Nike was still using Malaysian factories, like Honsin – where workers had to pay recruitment fees and where passports were confiscated – a decade after a 2008 exposé found that Nike was using a Malaysian factory that withheld passports, had illegal recruiting fees and had horrid housing conditions.

Transparentem’s report also criticized Variety Wholesalers – the retailing chain is headed by Art Pope the North Carolina multimillionaire and politician – for doing little to fix problems at Whitex, from which it had ordered garments through a middleman.

Templeton Blackburn, Variety Wholesalers’ general counsel, said Variety has never purchased goods from Whitex, but did buy “a very limited amount of goods from a New York vendor”. Variety said it didn’t “decline” to participate in remediation efforts, but had worked with its vendor and Transparentem to correct problems.

Transparentem also criticized Wolverine Worldwide, a footwear manufacturing based in Rockford, Michigan, saying that company should discuss with Perindustrian how it could do more to support reimbursement and that Wolverine “should assess whether its auditing” procedures “are thorough enough to detect suppliers’ risks of using forced labor”.

Wolverine responded that it takes “allegations of human rights violations” very seriously and said the factory has passed a “rigorous third-party audit” that didn’t find forced labor or other violations “claimed by Transparentem”. Wolverine says it was waiting for Transparentem to report back on audits before it took additional action.



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