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Telenor's Breach with Subcontractor in Bangladesh

Only Mizan Hatim Engineering has lost its contract with Grameenphone after disclosure of the illegal conditions at Telenor’s subcontractors in Bangladesh. The reason is not that the conditions are worse at this company than at the other contractors. “The company’s management has not shown the necessary will to improve conditions,” Pål Kvalheim, Telenor's Vice President Communications, told Norwatch.
Artikkelen er mer enn to år gammel. Ting kan ha endret seg.
Only Mizan Hatim Engineering has lost its contract with Grameenphone after disclosure of the illegal conditions at Telenor’s subcontractors in Bangladesh. The reason is not that the conditions are worse at this company than at the other contractors. “The company’s management has not shown the necessary will to improve conditions,” Pål Kvalheim, Telenor's Vice President Communications, told Norwatch.

(First published in Norwegian 20 May 2008)

By Pia A. Gaarder

The documentary “A Tower of Promises” was shown on the Norwegian Broadcasting System last week and has disclosed grave child labour, environmental offences and a series of serious breaches of elementary safety regulations at Telenor’s and Ericsson’s suppliers of antenna towers in Bangladesh. The film, which was made by the Danish journalist Tom Heinemann and co-produced with Erling Borgen, documents how workers balance between unsecured scorching galvanisation tanks, use dangerous machines without protective equipment, and breathe in poisonous gases and dust, as well as the use of child labour and direct discharge of poisonous waste water.

The subcontractors produce antenna towers for, among others, Grameenphone, in which Telenor owns 62% of the shares. The rest is owned by Grameen Telecom Corporation, linked to Muhammad Yunus and Grameen Bank. Grameenphone is the largest supplier of mobile services in Bangladesh and has an estimated market share of 46% in the first quarter of 2008. The company’s need for antenna masts is consequently great.

“When this case turned up, the simplest solution would have been to import the antenna towers. But that would have had extremely negative consequences for the employees of the companies in Bangladesh. We decided instead to clean up the companies so that they have good production conditions,” Pål Kvalheim, Telenor’s Vice President Communications, told Norwatch.

Telenor has consequently chosen to follow what has become an important rule in the work with ethical guidelines for subcontractors – that is, not to break the contact with factories in developing countries the moment criticisable conditions are revealed, but rather work to improve conditions.

Telenor and Grameenphone have nevertheless chosen to break relations with one of the five subcontractors in Bangladesh. This involves one of the biggest suppliers, Mazin Hatim Engineering (or Hatim Industries Ltd, as written on the company’s entrance gate in the film).

The reason is supposed to be that the management in Mazin Hatim during the period from when Telenor became aware of the film material on 11 April until the scandal exploded in May has not shown itself willing to improve conditions. But the lack of safety measures at Mazin Hatim has not prevented Telenor’s 62% owned subsidiary Grameenphone from collaborating with Mazin Hatim for 11 years.

One of the Large Ones
Hatim Industries is one of the large suppliers of antenna towers to Grameenphone. Hatim is supposed to have collaborated with Grameenphone since 1997, and, according to the factory management, they have supplied Grameenphone with a total of more than 1400 antenna towers and Ericsson with 65. Today the company has about 1000 employees.

According to Hatim, the company is one of three in Bangladesh that produce the big antenna towers to secure the mobile network. The other suppliers are Power Trade and Confidence, but Hatim claims that it and Power Trade are the largest. Each tower is estimated to cost about US$22,000-24,000. This is when it is fully installed, after the unsecured workers have climbed up and down the 43-meter towers and installed the parts.

Even though the conditions are more or less the same at the other suppliers of antenna towers to Grameenphone, Telenor has only broken with this contractor. It now seems that it is the company’s attitude during the past month that has been decisive.

Vice President Communications, Pål Kvalheim, related that Telenor initiated its own investigation after Tom Heinemann showed them the film recordings on 11 April. People were then sent from the headquarters in Oslo – in addition to people from Grameenphone – to examine the factories more closely.

During Telenor and Grameenphone’s first visit, the company’s own inspectors saw one minor at the contractor Mizan Hatim.

“The boy was in the production hall and not in the rooms with the chemical baths, but it is in any case prohibited for minors below 18 years of age to work in this type of company in Bangladesh,” Kvalheim related.

“Did you find child labourers only in this company?”

“Yes. Most of the children who had been filmed were gone when we arrived,” Kvalheim said. He emphasised that the contractors knew in advance that they were coming.

Telenor had, among other things, in advance sent the companies a formal legal letter that is much used in Bangladesh, a so-called “show cause notice”, in which the contract partner is asked to establish as probable that it is living up to the terms of the contract.

“In dialogue and correspondence with our subcontractors we have said that we have found contract breaches in all areas and that we want these to be cleared up in collaboration with Det Norske Veritas. It is in this dialogue that the management of Mizan Hatim has not shown the necessary will to participate in the improvement work. It has not taken this seriously enough, which made it difficult to continue the collaboration,” Kvalheim said.

“How much time did the company get to answer Telenor’s inspectors?”

“It answered the formal letter with the show cause request. It was, among other things, the contents of this response that, together with the attitude the management showed, which made us decide to terminate the contract,” Kvalheim explained.

He declined to go into detail about the answer Telenor received from Mizan Hatim.

“Haven’t you consequently broken the relationship with the subcontractor that most needs to improve conditions?”

“Yes, that is true, but we are completely dependent on the company management being willing to participate in improving conditions. Now, I know that the Danish journalist who made the documentary was surprised by this decision because the conditions at Mizan Hatim were no worse than at the other factories.”

“What is happening now to the minors who were working at these factories?”

“Heinemann filmed these boys last year. After he started posing questions these boys have not been found again. As part of the work to clear up the conditions, we wanted to consider how we could help these boys—that is, the one we saw at Mizan Hatim and those who are present in the documentary. In the film one of the boys is asked where he works. He answers “Confidence” and says he has about 30 fellow workers who are minors. We shall see whether we can manage to identify them and whether we can contribute in any manner at all in the way of education or other non-injurious work if they are 16-17 years old and want to work.” Kvalheim said.

“The basic reason for child labour is that adults do not earn enough. Will you include the wage situation in this review of the conditions at the subcontractors?”

“Yes. We shall consider all sides of the companies, from the working conditions to the physical production to pollution. The wage situation is also something we must consider. It is a well-known problem that one must look at the family situation. Some families are completely dependent on the income of the children. It also happens that the parents themselves do not work. A solution can, for example, be to offer the parents work. These are things we must consider. At present there are people from Grameenphone on the factory floor every day, checking that the basic safety regulations are complied with,” Kvalheim concluded.