The Malaysian palm tree big IOI faces labor abuse allegations in a brand new report


© Reuters. FILE PHOTO: Workers stand near palm oil fruits in a palm oil factory in Sepang, outside of Kuala Lumpur, Feb. 18, 2014. REUTERS / Samsul Said


From Mei Mei Chu

KUALA LUMPUR (Reuters) – According to a report by human rights group Finnwatch released on Wednesday, workers at Malaysian palm oil company IOI Corp are mistreated by managers, face poor living conditions and pay high recruitment fees.

IOI said it would comment on the report after its public release and directed Reuters to a "complaint tracker" on its website, where it handled Finnwatch's specific complaints.

IOI faces the allegations days after saying it will help with any investigation after the US Customs and Border Protection (CBP) said in a letter to an activist that it is investigating the company on allegations of forced labor.

Similar US research in the past has resulted in some Malaysian companies, including two palm oil producers, being banned from selling their products in the US.

Finnwatch, based in Helsinki, has been tracking working conditions at IOI since 2014.

It was found that IOI farm workers from India paid up to 45,000 rupees ($ 606.31) in agency fees, lived in poor housing conditions, and were not given copies of their employment contracts. She also criticized her wage policy.

"The case has also exposed serious, persistent gaps in the IOI Group's broader recruitment and wage policies, as well as its commitment to respect human rights," Finnwatch said in the report.

The results follow an investigation by Finnwatch on an IOI property in the state of Pahang on the east coast of Malaysia. She opened an investigation after receiving complaints from a relative of an IOI employee.

Finnwatch shared the report of the investigation with Reuters ahead of its release on Wednesday. It also shared the results and the full report with IOI and has been working with IOI since August 2020.

In the “Complaint Tracker” on its website, IOI said it suspended recruiting from recruitment agencies in India after Finnwatch said workers were forced to pay high fees in order to secure jobs. IOI said the fees paid by its employees were illegally collected from unknown actors, cannot be verified, and were outside of the company's jurisdiction.


Malaysia, the world's second largest palm oil producer, relies on migrants to produce the edible oil found in products from food to fuels.

The US-based CBP banned three Malaysian companies last year, including palm oil producers FGV Holdings and Sime Darby Plantations, for allegedly practicing forced labor, including abusive working and living conditions.

Both companies have appointed auditors to evaluate their work practices and said they would look into the agency to address the concerns raised.

Following the Finnwatch investigation, IOI said on its website it had demoted an employee for mistreating a worker and published guidelines on providing basic amenities and checking working hours.

IOI told Finnwatch that some workers are paid less for failing to meet the set work goals, according to the company's response, which is also published in the report.

Finnwatch noted that IOI had a complex piecework wage policy that resulted in abuse, errors and some payments below the minimum wage.

IOI told Finnwatch that some workers are paid less for failing to meet the set work goals, according to the company's response, which is also published in the report.

In its response to Finnwatch, IOI said workers were being given decent housing, but conditions were deteriorating "due to poor worker cleanliness".

IOI also said it had ordered all goods to give workers a copy of their employment contracts.

($ 1 = 74,2200 Indian Rupees)

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