FGV to appoint third parties to audit foreign worker recruitment agencies

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KUALA LUMPUR (Aug 19): FGV Holdings Bhd said it will appoint independent third parties by next month to audit and verify each of its newly appointed foreign worker recruitment agencies to ensure they fully comply with its requirements.

In a statement posted on its website, FGV said it is embarking on a comprehensive exercise that would involve independent audits on its labour recruitment processes and procedures, which is expected to commence in the next few weeks.

"The agreements with the independent third parties are being finalised and FGV will make the announcement at an appropriate time," the plantation giant said.

FGV said it no longer uses the services of contractors who supply foreign labour. It had revised its foreign worker recruitment processes and appointed 13 new recruitment agencies for Indonesia and India in March.

"All these recruitment agencies are appointed through an open tender process. Each agency has been vetted through a stringent process and engaged under new contractual terms that include protection of the rights of foreign workers," it added.

FGV was responding to allegations made against the group in a petition submitted by a coalition of non-governmental organisations (NGOs), dated Aug 15 and addressed to the acting commissioner for the US Customs and Border Protection (CBP).

There were several allegations made against FGV in the petition, citing a number of sources, including an article in the Wall Street Journal (WSJ) which was published on July 26, 2015.

"Regrettably, some of those allegations were indeed factually accurate at the time. Most have been corrected over the period commencing Dec 2018, with one major item that is expected to be completed by the end of this calendar year.

"This pertains to the legalisation of foreign workers in the state of Sabah, which has required engagement at government level and involves policy changes," FGV said.

FGV said it has 68 mills in Malaysia and an oil palm planted hectarage of 339,385 ha. Of this, 290,829 ha is leased from the Federal Land Development Agency (Felda) and was developed as part of the national agricultural development programme more than 30 years ago.

A third of FGV's current production of about three million tonnes are produced in these estates. FGV has full management control over these estates. The remaining two million tonnes are produced by independent or organised smallholders and estates.

FGV said a key element in addressing the issues that have been raised in the petition is the traceability of the fresh fruit bunches (FFB) supplied to FGV's mills.

"At this time, FGV has 100% traceability to all our own estates and to all FFB produced by smallholders who are part of organised government schemes.

"This accounts for about 70% of the oil produced by FGV. Of the additional 30% or about one million tonnes of oil produced from plantations owned by independent smallholders and estates, FGV is now able to trace 66% of its FFB quantity to Tier 1 suppliers (estates of origin and collection centres).

"Thus, 86% of the oil produced by FGV's mills is now fully traceable to Tier 1 suppliers. As a result, FGV is able to and has stepped up socialising our commitments to human rights and good labour practices to most of our smallholder suppliers and their dealer agents. This process was initiated in March 2017 and reviewed and stepped up in November 2018," it added.

FGV said it has made it clear that any supplier who does not comply with its requirements on labour standards, human rights, and environmental sustainability will be terminated if they are unable to change their practices within a reasonable timeframe.

The platation giant said the NGOs "quite understandably" questioned FGV's commitment to change its practices, noting that it has repeatedly failed to demonstrate improvements although the first article from WSJ was published more than four years ago.

"Several things have changed in FGV since 2018. For instance, the board of directors is entirely different from the board that was in place in 2015. Today, the board comprises subject matter experts and professionals.

"In November/December 2018 and in 2019, FGV has also made several changes in its senior management team. This new board and management team are committed to reform at all levels, especially in the areas of good governance and sustainability," it noted.

FGV welcomed all stakeholders who are interested to discuss these issues in greater detail and to visit and conduct verification audits of its operations, processes, and procedures.

At 3.40pm, FGV's share price rose was up one sen or 0.95% at RM1.06, bringing it a market capitalisation of RM3.83 billion.