Disney to Investigate Sweatshop Claims

The Walt Disney Co. said Friday it has hired an auditor to investigate claims that its Chinese contractors pay workers below minimum wage, demand excessive overtime and cheat labor monitors by faking pay slips.

Disney said it has asked the nonprofit firm Verite, a social auditing and training firm, to probe allegations by the Hong Kong-based Students and Scholars Against Corporate Misbehavior, a new group aimed at protecting Chinese workers' rights.

In New York, the National Labor Committee released a videotape of people with faces obscured to hide their identities who said they were workers at the Hung Hing printing factory in Shenzhen province and faced dangerous conditions. The videotape was provided by the Chinese workers' rights group.

The operator of one of the factories named in the labor group's report entitled "Recovering Mickey's Conscience," Hong Kong-based Nord Race Paper International Ltd., denied some of the accusations saying it fully complies with Chinese labor laws.

The group of university students and academics interviewed 120 workers in four factories in China's southern province of Guangdong between May and August this year and found that they were forced to work a minimum of 12 hours a day.

If they refused to work overtime, their pay would be withheld or deducted, the study found. In return, the workers were paid well below the minimum wage required by law in the districts where they worked.

"At one printing factory producing Disney books, there are four to five accidents a week. People have lost their fingers and palms," said Billy Hung, coordinator of the group.

"But instead of doing something about the machines, the factory just hires new workers," Hung told Reuters in a telephone interview on Friday. "And the accidents simply continue."

National Labor Committee Director Charles Kernaghan said Disney should make public the names of the factories that make its consumer goods and its process for ensuring safe and fair labour conditions.

"Disney has its own code of conduct but these manufacturers may not be telling the truth," Hung said.

"These practices must stop, especially the industrial accidents."

The allegations come less than a month before the Sept. 12 opening of Hong Kong Disneyland, which Disney hopes will draw throngs of tourists from neighboring mainland China.

Disney said in a statement that it takes the Labor Committee's claims "very seriously" and that it conducts regular audits of the factories that produce Disney-branded merchandise.

"Disney and its licensees will work closely with Verite to ensure a thorough investigation of these claims and take the appropriate actions to remediate violations found," a Disney statement said.

The statement also said that it had previously found and addressed international labor standard violations at some factories identified in the Hong Kong group's report, and that those offenses were not as serious as the latest claims.

Thursday's report said the Nord Race factory in the southern city of Dongguan, which makes Disney stationery, paid workers 2.69 Chinese yuan (33 cents) an hour until June when it promised to raise the rate to Dongguan's minimum of 3.43 yuan (42 cents).

But the factory put off paying workers their June salaries until the end of August, said the report, which claims to be based on worker interviews.

It said Nord Race workers allegedly put in 383 hours in March, exceeding the 204-hour legal limit.

The factory also failed to triple hourly pay on holidays as required, the report said.

At the Hung Hing printing factory in Shenzhen, run by a Hong Kong company of the same name, workers put in 12-hour days but were only paid for 10, the report said.

It also said that industrial accidents are common at the Hung Hing factory. A machine reportedly compressed a worker to death in 2002, and a falling piece of equipment crushed the waist of another worker in a nonfatal mishap in 2005.

The report also claimed that factories coached workers on how to answer auditors' questions.

The Nord Race factory allegedly issued fake time slips while concealing the real ones showing illegal hours, the report said.

Nord Race said in a statement it abides by Chinese labor laws, paying workers the required minimum hourly wage of 3.43 yuan (42 cents) and capping work hours at 204 a month.

In a response to the allegation that it coaches workers before audits, Nord Race said its workers are poorly educated and the company explains their rights, such as maternity leave, to them. It didn't address the other concerns.

A woman who answered the phone at Hung Hing Printing Group Ltd. in Hong Kong said the company's head was out of town and no one else could comment. She declined to give her name.

The Associated Press also faxed the report to the labor department in the southern Chinese province of Guangdong, where the factories are located. It didn't immediately respond.

The Hong Kong activist group wants Disney to use nonprofit auditors, make public a list of its contractors and their addresses, and announce its findings on labor abuses and industrial accidents.

Disney spokesmen in Hong Kong were not immediately available for comment.

Reuters and The Associated Press contributed to this report.