Malaysia's FGV fell short of labor norms, palm industry watchdog says

KUALA LUMPUR (Reuters) - The global palm oil industry watchdog said it has suspended the sustainability certification process for some plantations of Malaysia’s FGV Holdings, after the world’s largest palm oil producer failed to meet labor standards.

FILE PHOTO: A worker collects palm oil fruits at a plantation in Bahau, Negeri Sembilan, Malaysia January 30, 2019. Picture taken January 30, 2019. REUTERS/Lai Seng Sin/File Photo

The Roundtable of Sustainable Palm Oil (RSPO) said in a statement on Tuesday it has also re-suspended the certificate of FGV’s Kilang Sawit Serting mill after “unsatisfactory” findings from audits of its palm oil processing plants and supply bases.

The RSPO first suspended certification for Kilang Sawit Serting and its supply bases in 2018 after an investigation found indications of forced labor, “exploitative” labor practices, and lax oversight of contractors that hire the company’s foreign labor.

“It is the duty of all members to ensure that human and labor rights are protected and all complaints panel directives must be complied with and implemented within the given timeline,” Bakhtiar Talhah, RSPO’s interim chief executive officer, said in the watchdog’s statement.

The earlier suspension was conditionally lifted in August last year and the RSPO’s complaints panel said it would make regular checks to ensure FGV’s compliance.

But audits in October found migrant workers continue to face problems, and there is a lack of evidence the company is ensuring their pay and work conditions are in line with domestic labor laws, the RSPO said in a separate letter to FGV.

FGV has also failed to ensure that newly-hired foreign workers do not pay their agents unnecessary recruitment fees, and that they have been adequately briefed about their future working conditions, the watchdog said.

All work on achieving certification for FGV’s uncertified management units has been suspended, the RSPO said.

A spokeswoman for FGV said the company will appeal the decision and seek further clarification from the RSPO.

“FGV will officially appeal this decision to the complaints panel and the RSPO in view of FGV’s progress updates and action plans which are all in the process of being implemented,” FGV said in a statement.

FGV shares fell 2.6% on Wednesday.

The RSPO is a body of consumers, green groups and plantation companies that aims to promote the use of sustainable palm oil products. It is used by many European buyers as the international sustainability benchmark.

Last year, a group of non-governmental organizations called on U.S. authorities to ban imports of palm oil from FGV and investigate the company, citing concerns of forced labor and human trafficking on its plantations.

Reporting by Mei Mei Chu; Editing by Tom Hogue & Kim Coghill