Thursday 9 March 2017

Prosegur IPO - potential investors should take note of labour risks

Just a quick plus for UNI and their excellent work exposing poor labour practices at Spanish-listed security firm Prosegur. The company is about to carry out a partial float of its cash-in-transit business, which makes this a very timely issue for investors thinking about buying stock (I guess passive managers tracking European indices will have to).

Anyhow, significantly the prospectus for the IPO makes reference to the potential reputational risk arising from allegations of poor labour practices. In addition, investors should be aware that UNI has submitted an OECD complaint. Therefore this one requires some proper due dilligence.

UNI's release on this below

Prosegur’s IPO prospectus recognizes that UNI’s charges could present a risk for investors

Prosegur, the Spanish  private security giant, is preparing to raise capital for its Cash in Transit division through an IPO in March. 
In communications with potential investors, the IPO’s  prospectus recently  recognized that UNI’s allegations “of unfair labour practices … specifically… in Latin America and India”  could damage the company’s reputation.    
For several years, UNI has complained that Prosegur has violated the rights of its employees to form and join unions, and that its actions violate internationally recognized human rights standards.
In January, 2017, UNI filed a case against Prosegur with the government of  Spain which alleges that the company continues to violate the rights of employees in Latin America and India and does not have a due diligence process in place to identify and avoid the risks of human rights violations. Such a due diligence process is a requirement of the OECD Guidelines and the UN Guiding Principles for Business and Human Rights.
UNI’s submission provides examples of union activists employed by Prosegur in Latin America who have been threatened, harassed and attacked. It also cites a report from a renowned Indian labour attorney which found that Prosegur had committed systematic breaches of minimum legal obligations under Indian law.   
UNI Global Union Deputy General Secretary, Christy Hoffman said, “Why should any  investor accept the risk that Prosegur’s faulty management systems will continue to be the subject of global criticism? There is no excuse for Prosegur’s refusal to enter into a mediated solution to address the glaring deficiencies in its so-called “flexible” and “decentralized”  management practices.  These leave the door open for an “anything goes” approach, something which is not condoned by any standard of human rights due diligence.  Its time for Prosegur to put its house in order if it plans to continue to expand into high risk areas across the world. ”