Petaling Jaya, 15 February 2022 - With the primary goal of ensuring the wellbeing of its workers, Sime Darby Plantation Berhad (SDP) announced today several changes and improvements to its governance structures, policies and procedures. Towards this end, SDP will reimburse recruitment fees to its current foreign workers on 17 February 2022. SDP has also established an improved Responsible Recruitment Procedure and implemented new processes to enable better dialogue with workers.

SDP’s Group Managing Director Mohamad Helmy Othman Basha said that since the imposition of the Withhold Release Order (WRO) by the United States Customs and Border Protection (USCBP) in December 2020, the group has undertaken comprehensive audits both internally and with independent organisations. Unfortunately, these audits were unavoidably delayed as the Malaysian government had imposed strict nationwide movement controls over several months in 2021, to contain the spread of the Covid-19 virus.

Mohamad Helmy said: “This entire exercise has certainly been a learning experience for us. SDP has always been proud of having industry leading policies and practices. However, over the last year, we have learnt that there is always room for introspection and review, that improvement is a continuous journey. We have spent a long hard year auditing, examining, and occasionally, unearthing entrenched practices that needed to be improved or changed.

The Board and Management made the decision that we would face this almost existential challenge head on. Every gap we have found has been or is being closed, every lapse in governance is being or has been addressed, any improvement needed has been or is being made.

Today, we have implemented new and significant governance and structural changes to ensure that worker welfare and wellbeing is improved and entrenched within the organisation. A new Environmental, Social and Governance (ESG) scorecard and accountability mapping process have been implemented. We have also developed new platforms and channels for dialogue with our workers, to improve existing communications, to build trust and ensure they are heard.

We have taken stern and swift action against those who have not adhered to the company’s policies. Consequence management and accountability will help in our effort to ensure a sustainable shift in culture, but I acknowledge that the journey has just started.”

Reimbursement of recruitment fees

In July 2021, when it came to light that some of our foreign workers may have been charged additional fees by third-party recruitment agents, the Board of Directors agreed to reimburse our foreign workers. These fees are unreported payments charged by agents, sub-agents or other third parties to our foreign workers in countries of origin, in contravention of SDP’s zero recruitment fee policy.

In November 2021, after reimbursement amounts were calculated by an independent third party, the Board approved a provision of RM82.02 million to reimburse recruitment fees to current and past foreign workers. The reimbursement amounts were calculated by taking into account the typical foreign worker reported recruitment fees and related costs by nationality.

SDP will reimburse 15,078 current foreign workers an aggregate sum of RM38.55 million. Additionally, SDP is setting aside a sinking fund amounting to RM43.47 million to reimburse 19,565 former foreign workers. All reimbursements will be paid in a single lumpsum payment to foreign workers.

Current foreign workers will be informed of the reimbursement details in writing and receive their monies on 17 February 2022. They have full access to various channels of communication to raise any questions or concerns. The 15,078 workers come from Indonesia, India, Bangladesh, Nepal, Myanmar, Cambodia, Sri Lanka, and Pakistan.

A Sinking Fund Governance Committee (SFGC) has been established to oversee the reimbursement process to former foreign workers. The SFGC is chaired by SDP’s senior independent director and comprises directors, senior management, and external legal expert Mr Wilson Ang, Partner of Norton Rose Fulbright (Asia) LLP. SDP is also engaging law firms in each country of origin to manage the disbursement of funds. The full costs of these legal firms will be borne by SDP. Our foreign workers will not be required to pay any fees to receive their monies.

The sinking fund established for former foreign workers covers all those who have worked for SDP going back to 1 November 2018. They are from Indonesia, India, Bangladesh, Nepal, Myanmar, Sri Lanka and Cambodia. The payment is retrospective, in line with the publication of the Fair Labour Association’s report for the Consumer Goods Forum, titled “Assessing Forced Labor Risks In The Palm Oil Sector in Indonesia and Malaysia”, dated November 2018.

SDP has a register of former foreign workers and will be reaching out to them over the next few weeks. Where necessary, advertisements will be taken out to contact foreign workers or their next of kin. Independent auditors have been appointed to verify the lists of foreign workers and payment amounts. They will also sign off on payments when they are made.

SDP had committed to ensuring zero recruitment fees since 2017, with the implementation of its Human Rights Charter. However, in light of the fees foreign workers have had to pay, unknown to us and despite the existence of the zero-fee policy, SDP has revised and developed a more robust system covering the entire process of appointing recruitment agents, working with independent migrant worker rights specialist, Mr Andy Hall.

Ethical recruitment

In August 2021, SDP rolled out its revised Responsible Recruitment Procedure (RRP) and decided to focus initially on piloting the new procedure in our upcoming Indonesian worker recruitment activities. SDP set up a management committee specifically to manage the RRP Indonesian pilot project and this committee was involved over several months in shortlisting eight (8) recruitment agents in Indonesia to be engaged for further due diligence and auditing engagement through an open tender exercise. Nineteen (19) Indonesian agencies entered into the initial stages of the open tender process in total.

SDP has worked with Mr Hall since October 2020 to revise our RRP and guidelines that govern the hiring of our foreign workers. This new policy places heavy emphasis on the appointment of suitable recruitment agents via open tenders, with appropriate checks and balances to ensure workers are no longer exploited or encumbered with recruitment fees.

SDP will conduct regular due diligence on appointed recruitment agents to establish that they are licensed and have credible track records. Our selected agents chosen through the transparent open tender process will undergo mentoring and training to address any gaps in their understanding of our requirements. Their performance will be monitored to ensure contractual accountability for compliance to ethical and transparent recruitment standards, as well as our own policies and standards.

During the recruitment process, workers’ terms of employment will be transparently and clearly defined in native dialects / languages, to prevent any form of coercion, intimidation or deception. Any recruitment agents who do not comply with our ethical policies and standards will have their contracts terminated to prevent them from working with SDP again.

We hear our workers

Across our 121 estates and 33 mills in Malaysia, SDP has rolled out a new way of “Social Dialogue”, which is a two-way communication platform. In every estate and mill, foreign workers from each nationality nominate a representative for on-site dialogue with management representatives. Local workers are represented by the National Union of Plantation Workers (NUPW). Workers are able to raise site-specific issues for speedy resolution. The social dialogues which are conducted fortnightly in workers’ native languages also serve as a channel for management to share information with workers. This new system of social dialogue augments existing grievance channels across SDP’s operations.

Among the more common matters raised are health and safety, and workplace related issues such as repairs and process improvements. Once an issue has been raised, it is logged and monitored by an automated tracking tool and is then checked by an independent team to ensure that it is addressed and closed off.

SDP has also enhanced existing grievance and whistleblowing channels, including the establishment of a centralised Grievance Unit at Headquarters, that is the sole point of coordination and resolution of grievances, to maintain confidentiality. All investigators have undergone a rigorous training process and controls have been strengthened to ensure no backlash or retaliation against complainants. All conversations through the various grievance channels are conducted in the native dialects / languages of our workers, both foreign and local.

It is our policy to not retain the passports of foreign workers apart from those undergoing passport/work permit renewal. All workers have also been provided with personal lockers in their homes for their use and hold their own keys to the lockers.

Structural changes

To ensure that all improvements and initiatives planned and implemented are sustainable, the Board has approved an ESG scorecard that carries as much weight as the operational scorecard. This new scorecard is designed to ensure that clear indicators are put in place, monitored and applied across the Upstream Malaysia organisational structure.

Additionally, a new Social Welfare & Services (SWS) department has been established. This dedicated team will be responsible for overseeing the implementation of policies and procedures related to the well-being and safety of workers, ensuring that day-to-day Upstream Operations comply with internationally recognised best practices. We have also appointed 40 fulltime Site Safety & Sustainability Officers (SSSO) for all Strategic Operating Units (SOU).

The new Head of SWS will report to a new Chief of Upstream Business Support (UBS), who will lead the transformation and accelerate change in Upstream Malaysia. The Chief of UBS is a senior position, and a highly experienced and qualified individual has been recently appointed to this role.

While these units are new, the SDP Board Sustainability Committee (Board SC) has been meeting fortnightly since July 2021, to address the resolution of these labour issues. The Board SC is supported by a two-tier management team, the first of which is the Steering Committee chaired by Mohamad Helmy, which meets weekly. The second is a taskforce and working group chaired by the Group Chief Financial Officer, Renaka Ramachandran, which meets twice a week.

“Much work has gone into ensuring that SDP’s operations are free of the scourge of forced labour. However, that is only half of our goal today. We also want to make sure that both governance and structural improvements are entrenched, and that critical culture change takes root quickly, to eliminate any persistent recalcitrance.

“We are taking today’s challenges as an opportunity to create positive change,” added Mohamad Helmy.

SDP is committed to respect, support and uphold the fundamental human rights of those in and around our operations. These commitments have been inked in our Human Rights Charter, the core values of our business, and are governed by our Code of Business Conduct as well as Group Policies and Authorities. In addition to proactively reporting our human rights progress through the UK Modern Slavery Act Statement, SDP also adheres to the Universal Declaration of Human Rights and the United Nations Guiding Principles on Business and Human Rights.