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 the terms and conditions on which we are prepared to do business with manufacturers and other partners. The SOE Team has been working together with our manufacturing partners on programmes of continuous improvement throughout the footwear factories of our suppliers in Asia. In particular, the implementation of the SOE at PT Panarub factory in Indonesia has been consistent and genuine. We consider PT Panarub to be a leading SOE factory in the region.

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

The factories in Indonesia have been working hard on these issues, but we recognise that there are still some gaps in their management approach. PT Panarub currently has 2 unions which have been allowed to carry out all lawful activities. The factory is one of the first to have an alternative union, and management has been working hard to balance the interests of both unions taking into account their memberships. So it would be inaccurate to characterise factory as one which has suppressed the activities of new unions

Last September, a series of demonstrations were held in PT Panarub factory and the local area. Many employees of the factory were prevented from getting to work by their normal mode of transport, usually mini bus, and a large number of employees already on the factory grounds were strongly encouraged to join the demonstrations. At that time, there was some concern that factory employees had been intimidated by those who lead the demonstrations, and that there had been a series of unlawful acts endangering people's safety and property. Consequently, over the last 6 months, the local police have been conducting their own investigations. As a 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 and continued in her position as Secretary of Perbupas, the alternative union in the factory. No employees were dismissed as a result of the participation in the demonstrations. Nor was any action taken by the factory against any of the participants, regardless of their union status, as set out in the agreement witnessed by the Manpower Department following the demonstrations last September. It has come as some surprise then that Ms Ngadinah was detained.

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

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

Freedom of Association and Collective Bargaining: Business partners must recognise and respect the right of employees to join and organise associations of their own choosing and to bargain collectively. Where law specifically restricts the right to freedom of association and collective bargaining, business partners must not obstruct alternative and legal means for independent and free association or collective bargaining. Additionally, business partners must implement systems to ensure good communication with employees.

adidas-Salomon AG

26.04.01.