Palm oil body says it finds exploitative labor practices at Malaysia's FGV

KUALA LUMPUR (Reuters) - A global palm oil industry watchdog rapped Malaysia's biggest palm oil producer, FGV Holdings FGVH.KL, for "exploitative" labor practices, dire living conditions for its workers and lax oversight of contractors that hire its foreign labor.

The findings are part of an investigation by a panel at the Roundtable on Sustainable Palm Oil (RSPO) following a Wall Street Journal report in 2015 that detailed abuses faced by foreign workers hired by contractors for FGV plantations.

The RSPO panel found wide-ranging issues that were also in breach of its sustainability standards. It found that workers’ movements were restricted as their passports were taken away, deductions in wages were not transparent and workers did not get adequate access to affordable food supplies.

FGV said in a statement on Friday that it has frozen all new recruitment of workers from external contractors across its operations, with immediate effect, and that it will negotiate to directly employ these workers where possible.

It will also immediately absorb the costs of basic necessities, including food supplies given to its workers.

“Of the other findings by the RSPO complaints panel, the company is taking immediate measures to address all the issues raised as expeditiously as possible,” it said.

The panel said in a letter to FGV dated Nov. 28 and published on RSPO’s website that the palm producer may have been complicit in human trafficking partly because of the company’s failure to supervise its contractors.

“FGV’s practise/act of outsourcing its foreign workers to contractors is tantamount to exploitation,” the panel said .

The practice of outsourcing its foreign workers to contractors also violated Malaysian immigration law, it said.

The panel recommended that the RSPO suspend FGV’s sustainability certificate for its Kilang Sawit Serting palm oil mill and supply bases.

It also called on FGV to commit to recruiting legal migrant workers and this commitment extends to its contractors.

“Undoubtedly, FGV’s weak control over its contractors exacerbates FGV’s lack of control and supervision over its contractor’s workers,” the panel said.

Activists said RSPO’s recommended actions were not enough.

“With this decision, the RSPO has again failed to adequately hold accountable one of its member companies found guilty of widespread illegal labor violations,” said Robin Averbeck, Agribusiness Campaign Director for Rainforest Action Network.

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

Green groups have blamed RSPO for not doing enough to stop deforestation, habitat destruction and human rights abuses across plantations in top growers Indonesia and Malaysia.

Reporting by A. Ananthalakshmi and Emily Chow; Editing by Tom Hogue