Cablegate: Finnish Company Polar Electro Assists Forced Labor

VZCZCXRO3100
PP RUEHCHI RUEHDT RUEHHM RUEHNH
DE RUEHKL #0940/01 2980816
ZNR UUUUU ZZH
P 240816Z OCT 08
FM AMEMBASSY KUALA LUMPUR
TO RUEHC/SECSTATE WASHDC PRIORITY 1817
INFO RUCNASE/ASEAN MEMBER COLLECTIVE PRIORITY
RUEHHE/AMEMBASSY HELSINKI 0022
RHHMUNA/CDR USPACOM HONOLULU HI

UNCLAS SECTION 01 OF 02 KUALA LUMPUR 000940

SENSITIVE
SIPDIS

FOR EAP/MTS AND G/TIP

E.O. 12958: N/A
TAGS: PHUM PGOV ELAB KTIP FI VM ID MY
SUBJECT: FINNISH COMPANY POLAR ELECTRO ASSISTS FORCED LABOR
VICTIMS

Summary and Comment
-------------------

1. (SBU) Finnish company Polar Electro recently provided
compensation and repatriation assistance to 40 forced labor
victims from its Malaysian joint-venture company, following
interventions by an international NGO and Post. The Polar
Electro case appears illustrative of the challenges facing
some foreign companies when dealing with allegations of
forced labor at their Malaysian suppliers' facilities. These
challenges include the mindset among some Malaysian employers
that confiscating the passports of migrant workers, contract
swapping, and restricting the movement of foreign workers are
acceptable practices. Employers holding the passports of
migrant workers is the standard in Malaysia, which renders
the workers more vulnerable, but we do not have data on the
incidence of labor trafficking in Malaysian factories. In
addition to the Polar case, Embassy Kuala Lumpur continues to
engage the corporate community and civil society through
outreach programs designed to raise awareness of forced labor
and trafficking in persons for labor exploitation. End
Summary and Comment.

Finnish Company and U.S. Mission Respond to Reports
--------------------------------------------- ------

2. (SBU) Post, working in conjunction with the Finnish
Embassy, was able to facilitate the compensation and
repatriation of approximately 40 mostly Vietnamese workers
from conditions of forced labor in a Penang electronics
assembly factory. Polar Electro Group, a Finnish electronics
company, holds 60 percent share in Polar Twin Advance, the
local Malaysian company operating Polar Electro's Malaysian
factory in Penang. Boat People SOS (BPSOS) informed us on
July 1 that Vietnamese employed by Polar Twin Advance were
allegedly working in conditions of forced labor. Malaysian
plant managers reportedly had paid the workers at rates far
below those in their original contracts; confiscated workers'
passports; and denied salaries and intimidated workers who
complained. Poloff informed the Finnish Embassy about the
allegations, provided background information on labor
trafficking, and offered suggestions on a course of action.
As a result, the Finnish Ambassador personally contacted
Polar Electro's CEO to brief him on the reports of forced
labor. Polar Electro took quick steps to address the
situation, including sending an inspection team to the
factory the following week. However, the Malaysian
joint-owner of the factory refused to allow the inspection
team onto the factory's premises. When Finnish executives
eventually confronted Malaysian plant managers with the
allegations of labor exploitation, the plant managers were
both confounded and angered that the Finnish parent company
would raise such issues.

3. (SBU) Polar Electro then worked with BPSOS, which
provided the laborers with legal counsel to develop a
compensation package for the estimated 40 plus mostly
Vietnamese workers, even though the Finnish parent company
was not directly responsible for the mistreatment of the
workers. Post continued to engage with the Finnish embassy
on the issue, and on September 9 the Finnish DCM informed
Poloff that Polar Electro provided the workers involved a
compensation package totaling at least 300,000 ringgit (about
$91,000) for unpaid back salaries. Polar Electro also paid
to repatriate the workers to their home countries (Vietnam
and Indonesia), a process arranged with assistance from local
NGO Tenaganita. (Note: In an earlier forced labor case
involving the Esquel company, the Embassy had linked BPSOS to
Tenaganita, a longstanding anti-trafficking partner that
receives USG support.)

4. (SBU) The Finnish Ambassador, Finnish DCM, and two Polar
Electro executives from Finland briefed PolCouns and Poloff
on October 20 regarding Polar Electro's ongoing efforts with
the Malaysian plant. We were told that the Malaysian
partner, in addition to allegedly mistreating employees, has
denied Polar Electro access to its factory and may have
embezzled funds. The Polar Electro executives expressed
their frustration with the local partner's lack of
cooperation or information sharing on the forced labor
reports. Polar Electro wishes to divest shareholdings in the
Malaysian company and intends to file a lawsuit in Malaysia's
legal system against Polar Twin Advance.

Engaging the Malaysian Government
---------------------------------

KUALA LUMP 00000940 002 OF 002

5. (SBU) The Polar Electro executives said they received
little assistance from the Malaysian government to date, but
also admitted that they had not filed any complaints with the
authorities related to this forced labor case. Likewise, the
executives were unaware if other parties, such as Tenaganita
and BPSOS, filed criminal or civil complaints over the forced
labor conditions. Polar Electro speculated that some police
officials in Penang appear to be protecting the Malaysian
partner. One of the executives described an incident where a
policeman came to his hotel to question him as a form of
intimidation. Post provided Polar Electro with additional
points of contact in the Malaysian government for them to
pursue the case should they choose to do so.

Outreach Efforts
----------------

6. (SBU) Besides Post's active involvement in the Polar
Electro case, we are engaging the corporate community and
civil society through an outreach program designed to raise
awareness of forced labor and trafficking in persons for
labor exploitation. On June 18, Poloff met with the human
resource manager committee of the Malaysian International
Chambers of Commerce and Industry (MICCI) to discuss reports
of forced labor in Malaysia and the possible ramifications in
the international community. The business executives
responded very positively and MICCI requested a follow-up
presentation, which is set for November 13. In conjunction
with the release of the 2008 TIP report in June, Post briefed
the Malaysian Bar Council's human rights committee on forced
labor and how the Malaysia's 2007 anti-TIP law could be used
to prosecute forced labor cases. The Bar Council is an
active partner, providing its members with internal training
on the new TIP law and providing a Bar Council representative
to speak at both MICCI outreach events. In September, Poloff
discussed labor trafficking and forced labor with the Deputy
Speaker of Parliament and officials from the Malaysian Trade
Union Congress in Sarawak, East Malaysia.
KEITH

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