Lured Into Bondage

Some of the world's leading computer makers don't want you to know about Local Technic Industry. It's a typical Malaysian company, one of many small makers of the cast-aluminum bodies for hard-disk drives used in just about every name-brand machine on the market. But that's precisely the problem: it's a typical Malaysian company.

About 60 percent of Local Technic's 160 employees are from outside Malaysia—and a company executive says he pities those guest workers. "They have been fooled hook, line and sinker," he says, asking not to be named because others in the business wouldn't like his talking to the press. "They have been taken for a ride." It's not Local Technic's fault, he insists: sleazy labor brokers outside the country tricked the workers into paying huge placement fees for jobs that yield a net income close to zero. "They say they were promised 3,000 ringgits [$950] a month," the manager says. "How can we pay that? If we did, we would be bankrupt in no time."

So why don't those foreign employees just quit? Because they can't, even after they find out they've been cheated. Malaysian law requires guest workers to sign multiple-year contracts and surrender their passports to their employers. Those who run away but stay in Malaysia are automatically classed as illegal aliens, subject to arrest, imprisonment and sometimes caning before being expelled from the country. "Passport, company take," says a Bangladeshi who has worked at Local Technic. (Like other workers in this story he fears possible reprisals if he is named.) "They say, 'You come to this company, must work for this company, and cannot work other place.' They say, 'If you work [for] someone else, the police will catch you'." He paid a broker in Bangladesh $3,600 to get him a job at Local Technic. When he arrived, he says, he learned he was making $114 a month after deductions for room, board and taxes. The math is simple: minus the broker's fee, his net monthly pay is $14. If he never spends a penny on himself, three years of labor will earn him a grand total of $504.

This is a new chapter in the globalization story: a growing migratory work force trapped in conditions that verge on slavery. When Nike came under intensive media pressure in the 1990s for contracting with sweatshops in the developing world, those shops were typically subcontracted factories that used local labor. Now, as labor demands a bigger share of the profits in nations that are beyond the early stages of development, like Malaysia or Taiwan, cheaper labor is increasingly shipped in from poorer nations, like the Philippines and Cambodia. Often the conditions these migrants work in make a sweatshop look relatively benign by comparison. Lured from their homes by labor brokers making false promises of high wages, the trafficked workers often find themselves in a land where they don't speak the language, are saddled with impossible debts and are deprived of the passport they need to get home. "The old way of slavery was that the boss really owned you," says Rene Ofrenco, director of the Center for Labor Justice at the University of the Philippines in Manila. "But now legal recruiters and employers work in tandem to deceive workers who, vulnerable and isolated in a strange culture, are forced to accept harsh terms. It is in that context that you have endemic forced labor today."

The rise of forced migrant labor is so newly recognized that it is hard to trace the scope and roots of the trend. The most authoritative study comes from the United Nations' International Labor Organization, which first tried to gauge the scope of the problem just three years ago. Its 2005 report estimated that there are now 12.3 million people trapped in forced labor—defined as jobs that trap workers using mental pressure, debt bondage, deceit, physical duress or threats of violence, arrest, imprisonment or deportation.

Other estimates place the number as high as 27 million and as low as 4 million. While no one knows exactly how many of those forced laborers have been lured across borders, the ILO identifies trafficking as one of the "new forms" of forced labor that is intensifying in an increasingly competitive global market. "We seem still to see only the tip of a disturbing iceberg," warns the ILO. The U.S. State Department's 2007 Trafficking in Persons Report estimates 800,000 people are trafficked worldwide each year. The risks of their voyages are constant: last week, in the latest incident, 54 Burmese suffocated in a cargo container en route to the Thai resort of Phuket, the apparent victims of people smugglers.

Most of the trafficked workers end up in relatively remote outposts of the global supply chain—factories, plantations, fishing vessels—that ultimately serve mainstream consumers everywhere. In mid-2007, the State Department warned that "customers for the products of forced labor are often completely ignorant" of their origins. In fact, by following several of these chains through a complex string of middlemen to their end customers, NEWSWEEK TRACED forced labor to the world's third largest retailer and second largest hard-disk-drive maker, who deny current ties to forced labor or knowledge of the original source.

One reason the shadowy global market for forced labor is overlooked and underpoliced is that most media coverage focuses on the trafficking of women into prostitution, even though it is a small subset of the problem, with the total population of trafficked prostitutes now believed to number about 2 million worldwide. "We talk a lot about trafficking for sexual exploitation [because] sex and violence sells newspapers," says Richard Danziger, of the Geneva-based International Organization for Migration (IOM). "Only now are we getting the message across that human trafficking goes well beyond that."

The flows follow the same path as voluntary labor migrations, from Latin America to the United States, from South Asia to the Middle East, but the largest flow is likely within Asia. With huge pockets of poverty close by labor-hungry export powerhouses, Asian nations are a main departure point for labor migration. Last year the four main labor exporters in Asia—the Philippines, Indonesia, Bangladesh and Cambodia—sent a combined 2.5 million workers abroad. Many of them go to more-developed neighbors where, human-rights observers say, weak legal protections—styled to preserve national competitiveness against low-cost rivals China and India—render migrants easy targets for exploitation. In its latest report, the State Department ranked only Hong Kong and South Korea among the "tier one" countries making a serious effort to combat human trafficking. Singapore, Thailand and Taiwan were all ranked in tier two (trying but need to do more), and Malaysia alongside Burma and North Korea among the worst cases.

The report singles out Malaysia as a "regional economic leader" with the re- sources and government infrastructure to fight the trafficking of men, women and children into sex and commercial trades, but is making no significant effort to do so. It says Malaysia has failed to prosecute traffickers and has twice announced plans to create a shelter for foreign trafficking victims, but has yet to follow through. The report urges Kuala Lumpur to do more. Malaysia's foreign minister, Syed Hamid Albar, calls the State Department report "all false, not true," and adds that "Malaysia is a country that does not en-courage trafficking in persons."

But Malaysian law effectively makes every foreign worker a captive of the company that hired him or her. In the name of immigration control, employers like Local Technic are required to report runaways to the police. No one holds company managers accountable for lies told by independent labor recruiters inside or outside the country. And Western electronics giants give them business.

Local Technic, for example, has sup- plied parts and services to a company called JCY HDD, which sells components to the major hard-drive makers, including Western Digital, the second largest disk-drive maker, which says that in the past it did receive some parts and services from Local Technic. Western Digital is a member of the Electronics Industry Citizenship Coalition (EICC), which aims to improve working conditions and environmental stewardship globally, and requires members to audit the labor practices only of direct suppliers, not subsuppliers like Local Technic. Steve Shattuck, a Western Digital spokesperson, says the company requires suppliers "to exercise the same diligence with their suppliers," and that its current products do not contain parts or services provided by Local Technic. A JCY spokesman confirmed that Local Technic is a supplier, but declined to comment on forced labor.

So far, most of the efforts to stop forced-labor trafficking are much like the EICC: voluntary industry efforts at self-cleansing. They do not attack forced labor at its roots, where recruiters still operate with impunity. In Indonesia's neglected West Kalimantan province, "the scale is unbelievable," says Elizabeth Dunlap, who oversees the IOM's countertrafficking program in Indonesia. Across the Sulu Sea in the Philippines, a labor broker discloses his back-channel sources for tourist visas to Europe: bribes of several hundred dollars "deposited into the accounts of girl- friends or other fronts" for two cabinet-level bureaus and a prominent Western embassy in Manila. In Singapore, a labor broker puts migrants recruited across Southeast Asia onto fishing boats paying as little as $130 per month. According to several of its labor contracts obtained by NEWSWEEK, all but $50 per month is withheld until the crewman completes a three-year stint on the high seas, during which time "no fixed working hours" are set, "no overtime pay" is given and workers can be traded from boat to boat at the captain's discretion. Applicants pay $1,000 upfront for such jobs, and their contracts stipulate that sailors who quit for any reason face a $2,000 penalty.

Some of the recruits appear to be surfacing in service jobs not far removed from the mainstream consumer. Juren, 26, works up to 13 hours every day as a janitor for a company that has the contract to clean Kuala Lumpur supermarkets owned by Tesco. He earns $200 a month, half the pay a job tout promised him in 2006 before he left his village in Bangladesh, and twice what he actually pockets after his service deducts for food, housing and job-placement fees. Having invested his family's savings, sold a small rice field and borrowed from loan sharks to pay a labor broker $3,000, Juren figures that he'll clear only $600 for his three-year stint. Four other janitors working for Tesco's cleaning contractors tell similar stories. One, who shares a one-bedroom flat in Kuala Lumpur with 12 other janitors, says he came dreaming of "making my parents comfortable" and leaving something for his children, but landed in "a kind of prison." Tesco, the world's third largest retailer after Wal-Mart and Carrefour, says it "adheres to local labor laws" in Malaysia, denies using forced labor and says it conducts "regular audits" to make sure foreign workers are treated fairly.

Though more industries are trying to police good corporate citizenship, many have yet to target forced labor. That means companies with an industry seal of approval may not be treating workers well. Thailand's Sirichai Fisheries supports the U.S.-based Marine Stewardship Council and practices environmentally friendly fishing. But NEWSWEEK has interviewed four past crewmen on Sirichai vessels and seen written complaints to a Cambodian human-rights group from three others. All claim to have endured treatment that fits the ILO's definition of forced labor. They say they were trafficked into Thailand on tourist visas, forced to hand over their passports and compelled to board a boat bound for Africa even though the recruiter promised them cannery jobs in Thailand. "We thought we were finished," says Long Thorn, one of Sirichai's initial Cambodian recruits. "We didn't know how many years we were sold for. They lied to us."

The experience of forced labor offers shades of misery, as the stories of Long and his neighbor Chann Ham show. They were crewmates on a Sirichai voyage to Somalia in 2005. After the monthlong journey, they were assigned to separate fishing boats, each supplied every two months by a "mother ship" from Thailand. Long repaired nets, sorted fish and cleaned catches of tuna, shark and octopus, sleeping just four hours a day during peak times. After 27 months, he was re- turned home and paid $155 per month, less than the $190 he was promised, but enough to double the size of his family home and by a slick red motor scooter. Chann, racked by constant seasickness, tried to stow away on the mother ship but was forced back aboard his vessel by a Somali guard who, he claims, fired several live rounds between his legs. Ten months later Chann was shipped home and paid less than $500, or about $1.60 per day— enough only to buy a cow, and his father's disapproval. "The people who stayed had a lot of money when they came back, but [my son] couldn't stay," says Chann's father. "I don't know who to blame for this."

Absent clearly enforceable global rules, it is easy to pass the blame around. Sirichai's general manager, Wiriya Sirichai- Ekawat, admits there have been troubles with Cambodian recruits, but he blames labor brokers who were paid by Sirichai for their services in 2005 but were "not our people." Asked if the company's treatment of foreign employees amounted to slavery, he said: "We never do that." In an e-mail, the Thai company's managing director, Wicharn Sirichai-Ekawat, says Sirichai has only one policy: "To follow the law." He says Sirichai is the only Thai fishing company that does not use illegal labor. Chuop Narath, deputy director of employment and manpower in Cambodia's Ministry of Labor, says Sirichai's recruitment practices are illegal.

The risks won't deter hungry young men like Cambodian Tuon Sina, a 22-year-old newlywed with an infant child to feed. Last fall he left his ancestral village for Thailand and boarded a fishing boat for Somalia. He had heard of past troubles, but he'd also seen older neighbors return rich after working abroad and wanted "to follow their example." His mother's protests went unheeded. "I tried to stop him but I could not," she says. "It's a risky adventure for money."

There's a good chance you or your pets have eaten fish caught by Sirichai and similar operations, though in the fishing industry the supply trail is particularly murky. One of Sirichai's main buyers is Kingfisher, which supplies leading Western brands and is controlled by Maruha Nichiro Holdings, Japan's leading seafood retailer. Maruha says it will cease doing business with Sirichai if the allegations of illegal recruiting practices are true. But many seafood wholesalers say it's hard to enforce labor rules on fishing boats. "We don't control the boats," says Joseph Kiang, a senior Kingfisher executive. "The fishing boats have their own regulation."

Another major Kingfisher client, Boston-based wholesaler Jana Brands, says it can be sure that none of its tuna supply comes from Sirichai, because Jana tracks tuna catches carefully as part of the global campaign to protect dolphins from getting slaughtered in tuna nets. Howard Woolf, Jana's managing director, says that if end buyers can certify that tuna hauls don't accidentally endanger dolphins, they could also certify that fishing fleets do not employ forced labor. (Indeed, Jana does certify that the canneries it works with are labor-friendly.) But they don't, he adds, because neither consumers nor government agencies have ever asked them to "go all the way back to the boat for human rights."

And national regulations on migrant labor often codify existing problems. For example, when Taiwan passed regulations on guest workers, its aim was to prevent them from qualifying for citizenship. Caps on what Taiwan-based labor brokers can charge have not stopped brokers abroad from charging up to $14,000 per recruit. Indeed, funding pay-to-work schemes is now big business. Led by Chinatrust, Taiwan's largest private lender, several banks have begun extending credit to migrants at 19 percent annual interest. That's about what they would pay for credit cards, but labor activists have attacked these loans as financial support for the exorbitant broker fees. A Chinatrust spokesperson says the loans are not only "fair and transparent" but also prevent workers from relying on "loan sharks in rural areas" who would charge much higher rates.

The United Nations has passed no fewer than six protocols and conventions proscribing human trafficking and forced labor. But so far, labor-exporting nations, host countries and the international community have taken only small steps to control the traffic. In response to complaints, Malaysia has called a temporary halt to imports of labor from Bangladesh. At the other end of the pipeline, the Dhaka government has vowed to investigate charges that Bangladesh's labor exports effectively constitute legalized slavery. But emancipation remains only a dream.