(Updated)

HR Minister says no action taken against ATA IMS so far amid probe into forced labour claims

HR Minister says no action taken against ATA IMS so far amid probe into forced labour claims
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KUALA LUMPUR (Dec 1): The Ministry of Human Resources, which is investigating allegations of forced labour involving a subsidiary of ATA IMS Bhd that reportedly prompted its largest customer Dyson Ltd to cut ties with it, said on Wednesday (Dec 1) that no actions have been taken against the company so far.

Human Resources Minister Datuk Seri M Saravanan said in a statement that he had received information that the contract was terminated on mutual agreement between ATA IMS and the UK-based high-tech home appliance manufacturer, following problems of labour shortage faced by the ATA IMS subsidiary, ATA Industrial (M) Sdn Bhd.

Nevertheless, he reiterated that he had instructed his ministry to investigate the issue, a measure he announced last week.

A day earlier, the minister told Parliament that ATA IMS would be hauled to court, but did not specify for what charges when questioned by members of Parliament over the forced labour allegations that the company was facing. ATA IMS had also previously denied such claims.

"It is erroneous to say we did not take action, as we opened investigation papers when complaints were received. We had given a compound notice to them and it was not paid as of today (Tuesday, Nov 30)," Saravanan was quoted as having said in Parliament, but did not elaborate on what the compound was for.

A spokesperson for the ministry, when contacted, told theedgemarkets.com that the legal action Saravanan mentioned on taking against ATA IMS was unrelated to the forced labour issue. It is about an "old offence" that ATA IMS has yet to pay the compound for, the spokesperson said but did not specify what it was.

On Nov 25, Reuters reported that Dyson, which contributes to 80% of ATA IMS' revenue, would in six months terminate its contract with ATA IMS, which makes parts for its vacuum cleaners and air purifiers, following an audit of the latter's labour practices and allegations by a whistleblower.

ATA IMS subsequently confirmed the matter and warned it would see significant revenue drop from the termination. The company also said it had been in touch with Dyson for the full audit report on its labour practices, while highlighting the auditors’ view that the findings are “easily remediable with the commitment of the company’s management” and that the parties involved should discuss the findings in detail and develop a comprehensive strategy to address the issues.

Meanwhile, the company's share price, which had been falling since it released its quarterly earnings report on Nov 12 with a net loss of RM11.17 million reported for its second quarter ended Sept 30, 2021 — its first since 1QFY18 — plummeted further. The company has lost over RM2.5 billion in market cap since.

A problem linked to the industry since 2009

In his Wednesday statement, Saravanan also said the issue of forced labour has been linked to the local electronics manufacturing sector since 2009, which led to it being listed in the US Trafficking Victims Protection Reauthorization Act, where it states that the products produced by the sector involved the use of forced labour.

The problem, which has also been linked to the rubber glove manufacturing and oil palm plantation sectors, has given a negative image to the country and affected investors' confidence towards products produced in Malaysia, he said.

"Hence, I urge all parties involved, especially employers and industries, to conduct due diligence in the aspect of labour rights and welfare, to ensure Malaysia is no longer linked to forced labour practices," Saravanan added.

Among companies that have been recently mired in such allegations are rubber glove makers Top Glove Corp Bhd and Supermax Corp Bhd, as well planters Sime Darby Plantation Bhd and FGV Holdings Bhd.
 
ATA IMS shares settled 8.89% or four sen lower at 41 sen on Wednesday, giving the company a market capitalisation of RM493.17 million. The stock has dropped 84% from RM2.57 on Nov 12.

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Tan Choe Choe