Top Glove shares hit by US detention order

The detention order on its products might be related to foreign labour recruitment that the company said have been resolved


BURSA Malaysia high-flyer Top Glove Corp Bhd, which has seen almost RM11.6 billion wiped off its market capitalisation in the past three trading days, said the US customs has prevented imports of its products yesterday over labour-rights that the company said have been resolved.

Top Glove executive chairman Tan Sri Dr Lim Wee Chai said the company is seeking a permanent resolution with the US Customs and Border Protection (CBP) agency that placed a detention order on disposable gloves manufactured by two of its subsidiaries, Top Glove Sdn Bhd and TG Medical Sdn Bhd.

The company’s shares were suspended at 2.30pm yesterday soon after it issued a statement that it was reaching out to the US agency. Trading was to resume an hour later but failed after Bursa’s trading platform experienced “technical issues”.

Top Glove is the fourth-largest component in FTSE Bursa Malaysia KLCI by market capitalisation and had seen its shares surging more than 225% in recent weeks on demand of its product due to the coronavirus pandemic.

In Singapore, the stock came under heavy selling, suffering an 11 % drop to S$6.49 (RM19.92) on the Singapore Exchange in the afternoon trading session.

At a Zoom conference late yesterday, Top Glove said it would engage a consultant to resolve the issue with CBP within a month.

Top Glove’s Lim said the company would engage the same consultant that helped another Malaysian glovemaker, WRP Asia Pacific Sdn Bhd, resolve a similar problem it had last year.

In a statement to Bursa Malaysia, Top Glove said the detention order on its products might be related to foreign labour recruitment that has already been resolved.

“More issues with regard to retrospective payment of recruitment fees by our workers to agents before January 2019, without our knowledge,” the company said.

It said that since January 2019, the company is bearing all recruitment fees under its “Zero Recruitment Fee” policy.

“Over the past few months, we have been working on this issue which involves extensive tracing, to establish the correct amount to be paid back to our workers, on behalf of the previous agents.

“We estimate the total amount to be between RM20 million and RM50 million,” it said in the stock exchange filing.

Lim said if the matter is not resolved soon then the company will divert the gloves that are detained in the US warehouses to other markets where they are in demand.

“We will be giving back our deposits to our US customers if we fail to deliver our products to them. But there is such high demand from the US market due to the Covid-19 pandemic,” he said.

The US reported a total of 3.48 million Covid-19 cases and 138,000 deaths (at press time).

The glovemaker sells some 25% of its glove to the US market out of its 80.9 billion annual glove production.

The two subsidiaries, Top Glove Sdn Bhd and TG Medical Sdn Bhd, represent some 12.5% of its sales to the country.

Top Glove was also accused of labour rights violations in the UK recently.

The Guardian newspaper reported that the National Health Service employees were using medical gloves made in Malaysian factories where migrants are allegedly subjected to forced labour, forced overtime, debt bondage, withheld wages and passport confiscation.

The report was written based on 16 Top Glove’s foreign workers with eight from Nepal and Bangladesh who said they suffered mental torture working for the company.

Top Glove did not press legal charges on the newspaper’s claim.

This is not the first time Malaysian companies come under international scrutiny for its labour and environmental practices.

Recently a non-governmental organisation Liberty Shared alleged Sime Darby Plantation of using forced child labour to produce palm oil and the commodity’s related products.