Human Rights Site Spotlights Bank Investment in Chinese Manufacturer Linked to Forced Labor
Author: William Baue, SocialFunds.com, Published on: 25 August 2005
On August 17, 2005, the South China Morning Post, Hong-Kong's English-language newspaper, printed an article alleging that mainland China wig manufacturer Henan Rebecca Hair Products employs the forced labor of prisoners in Xuchang. The company's half-year financial statement reveals that Deutsche Bank, HSBC, ING, Merrill Lynch, Morgan Stanley, and UBS are amongst its top ten investors...Unsurprisingly, Henan Rebecca professes its innocence...The article's writer provides some specifics that cast doubt on the company stance...The banks all sing practically the same song, deflecting responsibility from themselves to their clients (except Merrill Lynch and Morgan Stanley, both of which have remained silent.) ...Only ING takes a next step..."I think the QFII [Qualified Foreign Institutional Investor - Chinese regulatory scheme under which brokers hold shares in Chinese companies for their clients] explanation is a thin veil, and inadequate for banks that have otherwise pledged to operate according to widely recognized international standards, which absolutely prohibit forced labor," says Mila Rosenthal, director of the business and human rights program for Amnesty International [USA]. "The investment risks are clear, both legally and financially, to the owners and shareholders...And of course the reputational damage [to the banks] is potentially huge..."