6 banks listed among top shareholders of Chinese wig firm reportedly using forced prison labour: Deutsche Bank, HSBC, ING, Merrill Lynch, Morgan Stanley, UBS

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Article
17 August 2005

Banks buy into jail-labour firm; Six financial giants among top shareholders of China's largest wig manufacturer which uses prisoners to make its products

Author: Jamil Anderlini, South China Morning Post [Hong Kong]

Six of the world's largest financial institutions have bought shares in a Chinese wig manufacturer that could be barred from the United States, its biggest market, because it uses forced labour to make some of its products. Deutsche Bank, HSBC, ING, Merrill Lynch, Morgan Stanley and UBS have all bought Shanghai-listed A shares in Henan Rebecca Hair Products, China's largest wig maker, through the qualified foreign institutional investor (QFII) scheme...Under international law, work done by inmates in China's "re-education through labour" system is classed as forced labour because inmates cannot choose not to work and are usually not paid, according to Human Rights in China and the China Labour Bulletin.

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Article
17 August 2005

Henan economic miracle labours under ugly truths [China]

Author: Jamil Anderlini, South China Morning Post [Hong Kong]

[At] Henan No 3 Labour Re-education Camp and...the smaller Henan County Labour Re-education Camp...[Henan Rebecca's] hair [is] sorted and braided by inmates before it is turned into finished [wigs]...These camps...are the backbone of [China's] "administrative detention" system, with 250,000 to 300,000 people incarcerated for up to four years each at the discretion of the police, according to Robin Munro, the head of research at China Labour Bulletin. Such arbitrary detention is condemned by numerous international human rights laws...Prison labour is not unique to China...The principal difference [from other countries] is that in China, inmates do not have the choice of whether to work or not and are usually unpaid. People who have spent time in these camps tell horrific tales of minimum 16-hour work days, churning out everything from rubber balls and toy rabbits to hand-knitted sweaters. Many products are for export to the west and the camps profit from inmates' labour without having to pay them a cent. Inmates who cannot meet quotas are often shocked with electric batons or submitted to other abuse.

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Company response
19 August 2005

HSBC response to South China Morning Post article raising concerns about shares in the Chinese company Henan Rebecca

Author: HSBC

HSBC recognises its duty to society and to conduct our business responsibly with the highest standards of professionalism and with absolute integrity...HSBC has not purchased shares in the company mentioned in the reports to which you refer. Our name appears on the list of shareholders because we hold these shares, as nominees only, on behalf of a client...While HSBC makes judgements about its own direct dealings with other organisations and individuals in accordance with its social, ethical and environmental policies and practices, we would not wish to police the shareholding decisions of any third party. This would be undesirable and almost impossible to implement. Since HSBC is not the beneficial owner of these shares, and we rigidly observe our obligations of strict client confidentiality, we are not able to comment further.

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Company response
23 August 2005

Response by ING: South China Morning Post article alleges wig manufacturer Henan Rebecca uses forced prison labour – says major banks, including ING, among its top shareholders.

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Company response
23 August 2005

The Announcement [Henan Rebecca Hair Products response to prison labour concerns

Author: Henan Rebecca Hair Products

Henan Rebecca Hair Products...always abides by the national law, rules and also the international law. The report about using the inmates to make hair products...written by Mr. Jamil Anderlini in the South China Morning Post is not true...we, the personnel of Henan Rebecca Hair Products Inc. always respect the human rights. We cannot use the inmates to make anything for us.

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Article
23 August 2005

[DOC] Comment by Jamil Anderlini on responses by Henan Rebecca and various banks to his article in South China Morning Post: “Banks buy into jail-labour firm”

Author: Jamil Anderlini

It is common knowledge in Xuchang that Henan Rebecca and many other local manufacturers use 'Labour re-education' prison labour for much of their low-skilled processing work...On visits to three of the 'laojiao' (labour re-education) camps, four separate guards and low-level camp officials explicitly confirmed that inmates are engaged in low-skilled processing work for Henan Rebecca...[None] of the banks [named on Henan Rebecca's share register] were willing to name their clients and so the responsibility for investing in a company using forced labour has been passed on to unaccountable nameless entities.

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Article
23 August 2005

[DOC] UBS response to South China Morning Post article raising concerns about shares in the Chinese company Henan Rebecca

Author: UBS

In May 2003 UBS was granted "Qualified Foreign Institutional Investor" (QFII) status by the China Securities Regulatory Commission. QFII permits UBS to provide their clients with direct access to China's domestic equity and debt markets. The purchase of Henan Rebecca shares was undertaken within this framework. Due to the way QFII works UBS is listed as owning such shares even though the transaction was handled on behalf of clients.

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Article
23 August 2005

[PDF] ING response to allegations of investing in a company [Henan Rebecca] reportedly using Forced labour [China]

Author: M.G.J.C. de Wolff-Janssen, Head, Corporate Responsibility, ING Group

...In this case ING has been providing market access for its clients. This means that ING buys the shares passing on the beneficial ownership to the investors. It is the investors' choice whether or not to maintain the holding or sell the shares. In this particular case ING has passed on all relevant information about the alleged controversial activities of the company to all clients invested in the company and has been informed that the clients are now urgently reviewing the situation.

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Company response
24 August 2005

Deutsche Bank response to South China Morning Post article raising concerns about shares in the Chinese company Henan Rebecca

Author: Deutsche Bank

Deutsche Bank has no proprietary holding in Henan Rebecca Hair products and does not provide research cover on the stock. Any listed holding in this stock by Deutsche Bank is on behalf of clients buying stock through the Banks Qualified Foreign Investor allocation in China.

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Company non-response
24 August 2005

Merrill Lynch (part of Bank of America) did not respond to: South China Morning Post article alleges wig manufacturer Henan Rebecca uses forced prison labour – says major financial firms, including Merrill Lynch, among its top shareholders.