Verite to investigate claims of law violations

HONG KONG (Dow Jones) — Walt Disney Co. said it will employ an outside monitor to probe claims that four Chinese factories licensed to create its branded products violate labor laws and put workers in danger.

Disney has asked the nonprofit auditor Verite to investigate allegations by Students & Scholars Against Corporate Misbehavior (Sacom), a workers’ rights organization based in Hong Kong.

In a report released late last week titled “Looking for Mickey Mouse’s Conscience,” Sacom asserted Disney manufacturers put workers in physical danger, violate minimum-wage laws, demand compulsory overtime and hide their abuses from labor monitors.

In a statement, Disney said it “will work closely with Verite to ensure a thorough investigation of these claims and take the appropriate actions to remediate violations found.”

Poor timing

The allegations come at a sensitive time for Disney: one month before the opening of Hong Kong Disneyland, which is expected to attract millions of Chinese tourists and become the company’s foothold in the China market.

On Saturday, Disney’s vice president of China affairs, Jun Tang, said the accusations weren’t a surprise, as “for years we have encountered claims.” But in 1996, he said, the company established a system to monitor labor practices, and it makes labor standards a priority.

Disney previously discovered and addressed labor standard violations at some of the factories identified in Sacom’s report. But those offenses weren’t as serious as the latest claims, the company said.

Org wants more

Sacom, a group of university students and academics founded in June, said it isn’t satisfied with Disney’s response. “There are problems in Disney’s monitoring approach and their buying practices,” because factories can lie or find ways around Disney labor standards, said Sacom’s chief coordinator, Billy Hung.

The Hong Kong group said it still wants Disney to make public the names and addresses of all its contract manufacturers and to announce its findings on labor abuses and industrial accidents.

The operator of one of the factories named in Sacom’s report, Hong Kong-based Nord Race Paper Intl., denied some of the accusations, saying in a statement that it fully complies with Chinese labor laws. The report claims a Nord Race factory in the city of Dongguan, which makes Disney stationery, paid workers 33¢ an hour, when Dongguan’s minimum wage is 42¢.

The report also claims Nord Race coaches workers before audits and issues fake time slips to conceal illegal working hours. Nord Race responded that its workers are poorly educated and the company explains to them their rights, such as maternity leave.

Sacom’s report also maintained industrial accidents are common at another factory, the Hung Hing Printing Group plant in Shenzhen.

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