From AP News:
KUALA LUMPUR (AP)--The world's largest rubber glove manufacturer faces fines of up to MYR121.2 million ($33 million) for employing more than 2,000 illegal foreign workers, a company official and news reports said Wednesday.
However, Malaysia's Top Glove Corp. said it expects to be spared from paying the maximum penalty.
Immigration officers raided a factory in Klang town, west of Kuala Lumpur, based on a tip-off and found that work permits for 2,071 of its foreign workers had expired, Immigration Enforcement Director Ishak Mohamad was quoted as saying by the New Straits Times newspaper.
Another 353 workers had no permits at all and 72 were without passports, he said. However, they were not arrested so the factory's production would not be disrupted, the newspaper said.
"The managers gave the excuse that they forgot (to renew the permits) or there were too many of them, but we don't buy that," Ishak was quoted as saying.
The Star newspaper quoted Ishak as saying it was "the first time the department has come across a case involving such a huge number of illegal workers in a single premises."
Under immigration laws, an employer can be fined up to MYR50,000 for each illegal worker.
Ishak and other immigration officers could not immediately be reached for comment.
Top Glove is the world's largest producer of rubber gloves for medical, household and industrial use.
Media reports did not identify the company, but Top Glove officials acknowledged it was their factory.
"It is an oversight on our part but we are giving our full cooperation to resolve this and to ensure it will not recur in the future," company executive director K.M. Lee told The Associated Press.
He said the fine was expected to have only a "minimal effect" on company earnings, noting that courts usually only impose maximum fines on employers who hire illegal migrants who enter the country without documents.
Lee said the company had been careless because of its rapid expansion in recent years but steps have been taken to strengthen internal monitoring. Most of the foreign workers caught were Indians, with some from Vietnam and Indonesia, he said.
Top Glove has 8,000 workers in eight factories in Malaysia, of whom 3,600 are foreigners, Lee added. The company also has two factories in Thailand and two in China.
Top Glove shares were down 3.3% at midday Wednesday at MYR8.70.
Top Glove closed at 8.65.
Questions/Issues.
1. Besides the issue of fines, assuming that the fines impact would be minimal, it now appears that Top Glove had been keeping its production cost low by engaging in such unlawful practise such as hiring illegals. So what's next?
Top Glove can't have this luxury no more. Right?
Which means its production cost will increase since they have to hire 'legals'.
Which means its bottom-line will be HIT in the future in regardless of the size of the fine.
2. Integrity issue!
This will stick out like a sore thumb!
How?
If proven guilty, it means that Top Glove is willing to engage in such unlawful activities to boost its bottom-line.
So how much can an investor trust this company?
3. How do you rate the management handling of this crisis?
The initial excuse of forgetting to renew the permits was as lame as it could get.
How?
past blog postings:
Top Glove..
Top Glove: Part II
Top Glove: Part III
Top Glove: Part IV
Top Glove: Part V
Top Glove: Part VI
Top Glove: Part VII
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