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Illustration by Security Management

Malaysian Palm Oil Producer Accused of Slave Labor

The United States blocked another Malaysian company from importing goods after an investigation discovered the use of forced labor.

The company, FGV Holdings Bhd., is one of the world’s largest producers of palm oil and palm oil products, according to Bloomberg. Palm oil is commonly found in several goods, including biodiesel, cosmetics, pharmaceuticals, processed foods, and soap.

“In 2019, $441 million worth of tropical oils were imported to the U.S. from Malaysia, much of that being refined palm oil, according to U.S. Department of Agriculture data,” Bloomberg reported. And while the first seven months in 2020 showed a decrease of 15 percent in shipments of tropical oils from Malaysia, that shortfall is expected to increase given insufficient replanting of crops paired with biodiesel mandates in the country.

The Office of Trade for the U.S. Customs and Border Protection (CBP) issued a Withhold Release Order (WRO) against FGV Holdings’s products—including any products from its subsidiaries and joint ventures. Effective 30 September, CBP began detaining these products shipped through all ports of entry.

“The order is the result of a year-long investigation that revealed forced labor indicators including abuse of vulnerability, deception, restriction of movement, isolation, physical and sexual violence, intimidation and threats, retention of identity documents, withholding of wages, debt bondage, abusive working and living conditions, and excessive overtime,” the CBP said. “The investigation also raised concerns that forced child labor is potentially being used in FGV’s palm oil production process.”

According to the International Labour Organization, although international and most domestic laws ban forced labor, the practice continues. An estimated 25 million people throughout the world are still subjected to the practice thanks to human trafficking, and 83 percent of those in forced labor are exploited by individuals or private businesses, generating roughly $150 billion in illegal profits on an annual basis.

FGV Holdings isn’t the first Malaysian country to recently get hit with a WRO. Disposable medical glove manufacturers Top Glove Sdn Bhd. and TG Medical Sdn Bhd. received orders in July which remain active as of 1 October. Top Glove, the world’s largest medical glove producer, is also suspected of using forced labor.

According to Security Managements October “News and Trends” article, two Top Glove shipments were detained, which contained half of the company’s U.S. sales.

To read more about how forced labor, bonded labor, and WROs can impact a business’s supply chain, check out “Bonded Labor Threatens Supply Chains.”