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South Ocean Group response re alleged labour rights abuses in Bangladesh factories

Business & Human Rights Resource Centre invited South Ocean Group to respond to the following item:

- “Chinese Sweatshop in Bangladesh”, Institute for Global Labour and Human Rights, 8 Mar 2012



In response, South Ocean Group sent the following statement:

8 Jun 2012

“South Ocean Group is aware of the report published by the Institute for Global Labour and Human Rights -“Chinese Sweatshop in Bangladesh” and is deeply concerned about the allegations made against Rosita Knitwear (Pvt) Ltd (“Rosita”) and Megatex Knitters (Pvt) Ltd (“Megatex”), in Bangladesh.

It is a value of the South Ocean Group to respect human and labour rights in all its factories and we have always endeavoured to do so. We strongly refute any allegation or assertion stating that we are a sweatshop. Our work force is one of our most valuable assets and a safe work place where all employees – workers and local management alike – are treated lawfully, fairly and with dignity and respect is critical to generating job satisfaction and security for our employees and optimal production for our factories.

As a result, we are taking the recent labour allegations and unrest at the Rosita and Megatex factories very seriously.

A number of general allegations involving human and labour rights violations were made in the IGLHR Report. We were shocked and concerned by these allegations, and took immediate action to investigate the allegations. Following an intensive third party investigation, we were advised that many of the more serious allegations (as further discussed below) were not substantiated, and we promptly took remedial steps to address and eradicate the identified issues.

After almost three months of in depth internal investigation, coupled with mediated dialogues with the workers through a reputable non-government labour organization, Verité, Inc. (Verité), and timely and on-going corrective actions, we have gained valuable insight into the wishes of the workers at the two factories. We would like to take this opportunity to share our insight as well as the remedial actions we have taken to improve the human and labour right conditions at the two factories.

The Rosita and Megatex factories began experiencing worker unrest in late January 2012. Since that time, South Ocean has taken decisive steps, with the assistance of independent professional advisors, to understand the workers’ concerns, to engage in mediated discussions with them, and to address the various labour and work place issues that led to the workers unrest.

To ensure a comprehensive investigation, South Ocean instructed the international law firm of Winston & Strawn (“W&S”) to oversee an independent investigation into human rights and labour issues at the two factories. At the same time, W&S instructed Verité to conduct an independent comprehensive social audit evaluation of the two factories, to mediate the negotiation between the workers and the factories, and to assist the two factories to implement corrective action programs. We also reached out regularly to Mr. Charles Kernaghan, Founder of the IGLHR, via Verité, to apprise him of the work Verité and we are doing.

On April 9, 2012, Verité produced their audit report on the Rosita factory, the “Verité Audit”, which we also adopted for the Megatex factory. In the interest of transparency, we shared this report with our affected customers and other stakeholders. The report identified a number of inappropriate labour practices that we immediately began to work with Verité to address.

While the findings of the Verité Audit raised issues of concern that needed to be immediately remedied, a number of the most serious allegations of human rights abuses identified in the IGLHR Report were ostensibly not included in the concerns raised by our workers to Verité during their investigation when asked specifically about them. As they are serious allegations, we believe it is important for the record and understanding of the labour concerns that we highlight the claims that were unsubstantiated as per the Verité Audit.

The Verité Audit confirms that:

• No child labor was identified

• No forced labor was identified

• Overtime payments were made as required by local law

• All overtime was voluntary

• No forced detention of workers was identified

• No systematic or intentional denial/cheating of workers’ wages was identified, and

• Sanitation facilities and medical facilities exist for workers.

We acknowledge that the Verité Audit has highlighted a number of areas that had to be immediately addressed. A summary of some of the actions the factories were advised to take and are currently being systematically addressed in the corrective action program that Verite is conducting and implementing on South Ocean’s behalf are listed below:

• Any instances of verbal abuses and punishments by local managers on workers must end.

• A standardized disciplinary procedure that includes an escalating series of verbal and written warnings prior to suspension or termination, which does not include punitive deductions from the affected workers’ pay, shall be established.

• Overtime work shall be confined within the limits set out in local laws.

• Any instances of utilizing deductions for tardiness or time missed that exceed the wage equivalent of actual time missed shall cease immediately.

• Any instances of forcing dismissed workers to sign letters of resignation shall cease immediately.

• The practice of allowing factory security guards to engage in disciplining workers shall cease immediately.

• Relevant national and local labor laws and regulations (or a summary of these laws and regulations) that cover minimum age, minimum wage, benefits (including holidays and leave), work hours, overtime rates, freedom of association, and harassment and abuse shall be posted.

• Conduct trainings to familiarize workers with national and local labor laws and factory personnel policies.

• Any instances of terminating and re-hiring workers for failing to meet their production quotas shall cease.

• Conduct continued review of the reasonableness of the factory’s production incentive system such that the majority of workers can meet their production incentive goals on a daily basis.

• Take measures such that workers are not discriminated against for taking part in free association activities conducted within the requirements of the Bangladesh Export Processing Zone Authority regulations, including involvement in the Worker Welfare Association. 

Verité developed a comprehensive corrective action plan (“CAP”) for the two factories. As mentioned above, we have engaged Verité to implement the CAP at the factories.

Throughout the first half of May, Verité conducted a senior management training for the Rosita and Megatex factories in which the direction and format of the CAP was discussed. In this session, the factory management committed to a plan that caters for a full remediation of all identified non-compliances.

Following this CAP, Verité conducted training for the middle managers and supervisors, comprising of workshops aiming at sensitizing the mid-level management staff to social responsibility concepts and issues.

Training sessions for the workers, called Peer Education Training, also commenced under the tutelage of Verité. This program aims at building up capacities among worker representatives (peer educators) in conducting dialogues on work place and personnel issues with all levels of factory management and among fellow-workers, in a non-conflict manner.

Over the next three months Verité will be conducting additional training for the staff and workforce within both factories and will continue to monitor working conditions in the factory and through offsite interviews with workers.

As of May 22, 2012, a new management team is in place at the factories which, among other things, is charged with the mandate to fully implement the corrective actions outline above in cooperation with and under the guidance of Verité.

We are confident that the corrective action program implemented under the direction of Verité, and the improvements and acts of good will already undertaken, will bring about gradual positive changes to the Rosita and Megatex factories, resulting in a more stable, transparent, humane, and productive work environment for everybody. We also recognize that once the current corrective actions have taken effect, the maintenance of the factories as socially compliant facilities is an ongoing effort, and we are committed to sustaining that effort.

We apologize to our customers for being affected by the current situations at the two factories, and thank them for their continued support.

We also thank the Business & Human Rights Resources Centre for affording us this opportunity to respond to the IGLHR Report.”

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