YTY Group accused of ‘deception, intimidation and debt bondage’, says it is ‘working to improve conditions of migrant workers’

US authorities have banned disposable gloves from a manufacturer in Malaysia over allegations it uses forced labour, sending the share price of global protective equipment group Ansell into a tailspin.

The customs and border protection unit of the US Department of Homeland Security said it had “information that reasonably indicates the use of forced labor in YTY Group’s manufacturing operations” and banned the importation of gloves made by the company.

CBP alleged workers at YTY, which is one of Ansell’s top five suppliers, experienced “abuse of vulnerability, deception, retention of identity documents, intimidation and threats, debt bondage, abusive working and living conditions, and excessive overtime”.

Ansell’s share price plunged almost 15% when it revealed the US import ban, together with Covid outbreaks in its Malaysian factories, would cut its earnings for the first half of the year by as much as 35%.

The ban, known as a “withhold release order”, followed a complaint from Nepal-based activist Andy Hall.

He said it was the fourth made against an Ansell supplier out of the six orders CBP has made against Malaysian glove companies since 2019 and accused the Australian-listed company of failing to properly deal with a longstanding problem with allegations of forced labour in its supply chain.

“They have a history of not remediating any of these issues, you know, they just go and they buy from another company,” he said.

He said that in relation to a US ban on gloves from another supplier, Top Glove, “they didn’t even stop buying”.

“They just started rerouting products to their European and Australian markets.

“They have a huge issue and to be honest, they’re one of the companies that I detest the most actually, because of their behaviour, and the way in which they fail to remediate things.”

He said exploitation of overseas workers, who mainly come from Bangladesh and Nepal, was rife across the glove-making industry in Malaysia.

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Some workers in the industry are charged large sums to come to Malaysia, have their passports kept by bosses so that they can’t leave, work excessive overtime that can result in seven-day work weeks and are exposed to violent reprisal if they complain, he said.

“There’s been a lot of changes in the industry since I started campaigning in 2018, mostly because of the US sanctions and because of the media pressure,” he said.

“So there’s slowly been improvements but the pandemic has really increased the workload and they haven’t been able to get new workers from overseas, so the workers are really working very long hours.”

YTY’s chief executive, Vikram Hora, said the company had been working to improve the conditions of migrant workers since 2019, “given that they are at greater systemic risk for abuse or exploitation”.

“Given the substantial and continuous progress YTY has made over the past three years, we are both surprised and disappointed with the enforcement action taken by the Department of Homeland Security, especially as this action was undertaken without any form of prior engagement with us,” he said.

However, Hall said he told YTY about the CBP investigation.

“I definitely think they’e been improving a lot, but whether or not they’ve solved these issues, I don’t know,” he said.

An Ansell spokesperson said most of the companies hit by US bans “are minor suppliers to Ansell and two of the four (Top Glove and WRP) are now again exporting into the US with their respective WROs revoked by US Customs and Border Protection”.

“Ansell clearly and publicly acknowledges the risks that modern slavery practices may be evident in our supply chain,” the spokesperson said.

“Risks of human trafficking are driven in large part by our use of migrant labour and recruitment agents, particularly in our manufacturing plants in Malaysia and Thailand. Similarly, risks of forced labour in our operations are most likely to be present as debt bondage, driven by deceptive recruitment practices in the third-party hiring of migrant labour”.

The spokesperson said that Ansell followed the advice of human rights groups and rather than walking away from suppliers with problems preferred to work with them “to drive positive change through ongoing dialogue and the audit process, where possible given the current pandemic conditions”.

“However, when we identify suppliers who do not align with our labour standards commitment and who are not working in good faith to progress positive change in their labour standards compliance, we review our potential options, including finding alternate sources for our product and terminating the supplier relationship”.

The CBP began investigating potential violations of labour standards at YTY in March last year after a complaint from Hall, documents he provided to Guardian Australia show.

Announcing the ban, the secretary of homeland security, Alejandro N Mayorkas, said the US would “continue to leverage all of our authorities and resources to bar goods produced with forced labor from entering the United States, and with my designation earlier this week of a senior accountable official to prevent human trafficking in DHS contracts, we are leading efforts to ensure that no taxpayer dollars are ever used to purchase goods or services that rely on forced labour”.