Revealed: Condom supplier to NHS and British high street accused of 'shameful' working conditions

Mahesh Thapa has a look of desperation in his eyes. The young Nepali father travelled more than 2,000 miles from Kathmandu to work at the world’s largest condom-making company in Malaysia, sacrificing a life at home with his two young children to pay for their food and education.

He had hoped his job at a factory supplying condoms to the NHS and major high street brands including Tesco, Boots and Superdrug would secure his family’s future.

But now almost two thirds of the way through his three-year contract at the Karex Innolatex factory in Port Klang, near Kuala Lumpur, Mr Thapa is worried that they cannot survive on his 91p an hour basic salary.

On the verge of tears, he told the Telegraph his overtime had dried up, leaving him struggling to support his mother, wife and children. He earns just £190 a month despite working eight hours a day, six days a week.

“I have a family, and I have to eat and survive here. Without overtime I can’t support them. What should I do?” he pleaded.

Walking out and and returning home is not a viable option. Like many workers in Malaysia, Mr Thapa fears he would incur a penalty of three-months salary if he broke his contract early.

He also remains indebted to a creditor, who lent him the £810 fee demanded by Nepali recruiters to secure the post. They promised he would earn twice as much as he is – the reason he took on the contract.

The Telegraph talked to 22 Nepali and Bangladeshi employees of Karex’s condom and catheter factories in Pontian, Senai and Port Klang last week.

Despite the products they produce being supplied to some of the world’s biggest and most “ethically conscious” brands, all told similar stories.

Some Karex workers were living in cramped and undignified conditions, housed up to 12 in a room in damp and unhygienic dormitories.

For £9 a month deducted from their wages, workers in Pontian received half of a steel bunkbed – but no mattress – a piece of string on the grimy wall for a wardrobe, access to a filthy, broken toilet, and a kitchen consisting of two gas burners.

“Sometimes poisonous snakes come in,” said one Karex worker. “The hostel is not ok. We cannot survive like this.”

In Port Klang, a dormitory of 12 workers seen by the Telegraph was more hygienic, but still devoid of basic facilities. In one corner stood a makeshift dining table crafted out of scrap plywood, with upturned buckets as chairs.

Residents said security was their biggest concern, with local gangs targeting migrants for their meagre earnings.

A Nepali woman who fought off four men who tried to mug her on the way home from a shift said Karex was not doing enough to protect workers. “We are cats and dogs here, of no value at all,” she said.

According to Forbes, Karex produces five billion condoms a year, accounting for roughly 15 per cent of the world market. It has a turnover of nearly £70 million and it’s senior director, Goh Siang, is listed as one Malaysia’s richest men.

On the company website, a corporate video claims the firm is “helping humanity one condom at a time”. It describes itself as a “champion social responsibility and sustainability”.

Karex owns the Sussex company Pasante Healthcare Ltd, through which distributes its products in the UK. Pasante’s website says its condoms are the “brand of choice” for many in the NHS. Its clients include Tesco, Boots, Superdrug and Costco.

Globally Karex boasts a “clientele of governments, NGOs, brand owners and retailers in over 130 countries”. These have included Marie Stopes International, Reckitt Benkiser, the owner of Durex, and Global Protection Corp, which distributes the ONE condom brand.

Karex said on Wednesday that it “does not believe that forced labour or modern slavery is currently occurring at our factories”.

However, Goh Miah Kiat, the Karex CEO, said the company recognised it was “critical to shed light on unfair labour practices” and took the allegations “extremely seriously”.

Previous issues raised by regular independent audits had been promptly addressed and a number of improvements, including a complete review of hiring, retainment and compensation policies, were already underway, he said.

Karex was committed to “continuous vigilance and improvement” and would hire “an independent firm specialising in ethical trade, human rights, labour standards” to carry out a “full social analysis” within 45 days. A committee of management and employees would also be created.

Testimonies from the firm’s South Asian migrant workers, many from desperately poor backgrounds and supporting families back home, paint a bleak picture.

All those interviewed by the Telegraph said they would struggle to survive without daily overtime. While their basic monthly salary of 1,000-1,100 Ringgit [£190] meets Malaysia’s legal minimum wage requirements, evidence from workers, backed by data from the Wage Indicator Foundation and the Central Bank of Malaysia, raises concerns about whether it could be properly called a “living wage”.

The Ethical Trading Initiative (ETI), which promotes a code of conduct on workers’ rights that many British retailers have signed up to, describes a living wage as “enough to meet basic needs and to provide some discretionary income”.

Employees should be able to earn this within regular working hours and without resorting to excessive overtime.  

Most Karex workers interviewed by the Telegraph claimed to regularly work 12-24 hours of overtime a week to boost their income and were fearful of losing their extra hours.

A single mother-of-two, who migrated to Malaysia after being abandoned by her husband while pregnant, admitted she was fatigued by continuous 12-hour daily shifts, but that she felt she had no choice.

“I have no husband and I have to look after my children. If I’m tired I still need to do the job,” she said.

The workers financial woes are compounded by fees demanded by recruitment firms and brokers in their home countries, which leave them in debt bondage for much of their first year of employment.

Nepali workers said they paid between £810 and £1,147 – financed mainly by loans at 2-5 per cent – despite a Nepal government cap of £67 on migration fees, introduced in 2015.

In Bangladesh, recruitment premiums are even higher, with workers citing charges from £2,300 to £3,405. “Bangladesh has a population problem. There are no jobs, so people have no choice,” said one young man from Jhenaidah district.

Brokers sell a promise of good wages and living conditions that often fail to materialise.

An open letter, published on Wednesday by leading workers’ rights organisations, including the ETI, urged the Malaysian government to take more action to avoid human rights violations in global supply chains linked to rubber gloves and condom factories.

“We are concerned about allegations of severe violations of workers’ and human rights, particularly against migrant workers, that may constitute forced labour or create the conditions that pose a high risk of modern slavery,” it said.

Karex did not specifically address the question of a living wage, but said workers could receive salary adjustments after annual reviews.

“On the allegation of excessive overtime, we do recognise that some of our migrant workers would like to work more overtime hours, in part due to anxiety over the reimbursement of recruiting fees or loans they have taken up in their home country,” said a company statement.

“We believe strongly that the best path forward is to eliminate recruiting fees.”

It stressed that it did not sanction fees imposed by foreign agencies and was working to find a solution which “requires government intervention to eliminate corruption”.

The company said it had frozen the recruitment of foreign workers in early January until it could ensure they were hired “without incurring debt”.

Meanwhile, since January 1, workers can also now terminate their contract at any time without penalty, said the company.

But the concerns raised by Karex workers extend beyond low pay and recruitment charges. Four employees at the Senai factory claimed they could only retrieve their passports from company lockers if they paid a security guarantee of at least one month’s wages.

Mr Goh said Karex contracted with a number of privately-owned hostels and was working to ensure upgrades. The company plans to move 250 employees, 25 per cent of its foreign workforce, to a new dormitory this month, while the £9 charge had been stopped on January 1.

“The welfare and security of all employees is of the utmost importance” and safety measures would be improved, he added.

He also denied it was company policy to withhold employee passports and said personal lockers would be provided.

Dr Mahmood Bhutta, founder of the British Medical Association’s Medical Fair and Ethical Trade Group described the conditions facing workers as “shameful and appalling”.

“They reflect a broader problem of a lack of respect afforded to migrant workers in many factories in Malaysia, many of which manufacture healthcare products,” he said.

“The NHS purchases large volumes of healthcare goods, such as condoms and surgical gloves that are produced in Malaysia. However the NHS has not yet implemented effective or sustained processes in the supply chains it uses for protecting workers, like these”.

The Telegraph understands the BMA will chair a meeting of industry representatives, activists and officials on Thursday to discuss how to address labour rights abuses in healthcare supply chains, including in Malaysia.

Karex’s clients expressed concerns about the Telegraph’s findings and all said they would take action where necessary.

An NHS Supply Chain spokesperson said: “We take all allegations concerning labour standard abuses very seriously and have contacted the supplier about this matter.” It added that its supplier code of conduct “addresses issues such as forced labour, wages, working hours as well as health and safety”.

Superdrug said it took the employment conditions of all those in its supply chains seriously and had worked with Karex for three years without identifying problems. It’s most recent audit was conducted last week. “We have temporarily suspended all orders with the Karex Group however we have had an urgent call with our supplier to discuss the findings from our [recent] audit and these do not raise concerns”, it said.

Tesco said it had also visited the factory last week and, after speaking to workers, had identified “a number of serious concerns”. It added: “We immediately suspended Tesco production at the site pending further investigation…  Everyone who works for, or with Tesco, has a right to be fairly treated.”

Reckitt Benkiser, owner of Durex, said although only 1 per cent of its condoms were outsourced to Karex, it had a “zero tolerance” policy on human rights abuses. “We audited this Karex facility in 2018 and have been in active dialogue with the company to implement necessary corrective actions,” said a spokesperson.

Marie Stopes International last ordered from Karex in 2017 but said that “in light of this investigation we can confirm that we will not place orders with Karex in the future”.

Global Protection Corp said: “We are taking this very seriously, and are already working with Karex to investigate.”

Boots had not replied at the time of going to press and USAID could not respond because of the US government shutdown.

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