April 26, 2001, Response from adidas to our protest letters on the Panarub case

Message from Adidas (April 26, 2001)

Dear All,

We have received e mails from some of you regarding the arrest of Ngadinah. We are concerned and are continuing to follow this matter closely. In the meantime we would like to communicate the present poistion in the attached statement to you.

best regards

David Husselbee Statement: PT Panarub, Indonesia.

The adidas-Salomon Standards of Engagement ("SOE") clearly set out theterms and conditions on which we are prepared to do business withmanufacturers and other partners. The SOE Team has been working togetherwith our manufacturing partners on programmes of continuous improvementthroughout the footwear factories of our suppliers in Asia. In particular,the implementation of the SOE at PT Panarub factory in Indonesia has beenconsistent and genuine. We consider PT Panarub to be a leading SOE factoryin the region.

During the last 12 months, there have been frequent demonstrations andstrikes in factories in different industries in Indonesia, so our SOE Teamhas felt it important to maintain a strong focus on:§ support for the Right of Association standard under the SOE and freedomof association according to the laws of Indonesia;§ management-worker communication systems;§ development of, and interaction with, unions under local law, includingtraining of union members in health & safety and labour issues.

The factories in Indonesia have been working hard on these issues, but werecognise that there are still some gaps in their management approach. PTPanarub currently has 2 unions which have been allowed to carry out alllawful activities. The factory is one of the first to have an alternativeunion, and management has been working hard to balance the interests ofboth unions taking into account their memberships. So it would beinaccurate to characterise factory as one which has suppressed theactivities of new unions

Last September, a series of demonstrations were held in PT Panarub factoryand the local area. Many employees of the factory were prevented fromgetting to work by their normal mode of transport, usually mini bus, and alarge number of employees already on the factory grounds were stronglyencouraged to join the demonstrations. At that time, there was some concernthat factory employees had been intimidated by those who lead thedemonstrations, and that there had been a series of unlawful actsendangering people's safety and property. Consequently, over the last 6months, the local police have been conducting their own investigations. Asa result, on 23 April 2001, they detained one of the factory employees,Ngadinah Binti Abu Mawardi.

Before her detention, Ms Ngadinah continued to work in the factory andcontinued in her position as Secretary of Perbupas, the alternative unionin the factory. No employees were dismissed as a result of theparticipation in the demonstrations. Nor was any action taken by thefactory against any of the participants, regardless of their union status,as set out in the agreement witnessed by the Manpower Department followingthe demonstrations last September. It has come as some surprise then thatMs Ngadinah was detained.

adidas-Salomon deeply regrets that she has been singled out for detentionand prosecution and it is our hope that she is released. However, giventhat she is the subject of a criminal legal proceedings being dealt with bythe local public prosecutor, her release is not within the control ofadidas-Salomon or PT Panarub.

adidas-Salomon will continue to investigate this matter and follow the caseclosely. We will continue also working with the factory to ensure that theRight of Association standard is honoured. Recently, our own efforts inthis area have resulted in improvements to our standard which will help ourpartners to better understand their obligations. The revised standard nowreads:

Freedom of Association and Collective Bargaining: Business partners mustrecognise and respect the right of employees to join and organiseassociations of their own choosing and to bargain collectively. Where lawspecifically restricts the right to freedom of association and collectivebargaining, business partners must not obstruct alternative and legal meansfor independent and free association or collective bargaining.Additionally, business partners must implement systems to ensure goodcommunication with employees.

adidas-Salomon AG

26.04.01.