KUALA LUMPUR, MALAYSIA - Nike Inc has a right to carry out investigations into the alleged abuse of workers in a local factory in Kepong as it had a business contract with the factory, said Human Resources Minister Datuk Dr S. Subramaniam.

"It is my view that if a company has an outsourcing contract with a multinational firm, then the company has a responsibility to obey all conditions of the contract."

Dr Subramaniam was clarifying some reports which quoted him as saying that Nike should not get involved in local business affairs.

"I never said that. That was a total misquote.

"Nike has a right to make sure the factory belonging to Hytex Apparels obeys the conditions. It is a business deal," he said at a media briefing to clarify the issue.

Foreign wire services had reported on Saturday that the sports footwear and apparel giant had put out a "red alert" on Hytex Apparels, following allegations of substandard living conditions and failure to pay the salaries of its foreign workers.

An English language daily had also quoted Dr Subramaniam as saying Nike should not meddle in local business affairs. "What I said earlier was that we would investigate and make an official statement. What came out in certain papers was a total misquote and purely a miscommunication."

Dr Subramaniam said Hytex Apparels might have failed to meet some of the conditions imposed by Nike but some of the allegations had been found to be false.

He said one of the false allegations was that workers were not being paid in full.

Ministry officers also found that the workers' passports were being kept by the employers for "safety" reasons and were not held without their permission.

The workers were issued employment cards to show that they were here legally.

The ministry's officers were also told that the workers were provided with free housing in the form of three-bedroom flats, with four workers to a room.

Asked if 12 persons to a flat was too cramped, Subramaniam said he could not comment further on the issue as his officers had not seen the flats located in Desa Aman Puri in Kepong. He said they would do so immediately and check on the living conditions.

Dr Subramaniam said his ministry could only advise the company to provide adequate living facilities as there was no provision under the law for legal action.

There is also no legal requirement for companies to provide housing for foreign workers.

The law only stipulates that foreign workers should be given similar treatment as local workers.

"Perhaps it is time that we looked into this issue since we have many international companies coming to do business in our country."

Housing for foreign labour comes under the jurisdiction of the Immigration Department, but only as an administrative requirement.

Dr Subramaniam said his officers found Hytex Apparels employed 800 foreign workers while its sister company, Leading Textiles in Kepong, had another 345 foreign workers.

He said the ministry viewed the Nike issue seriously as it involved the country's continuing ability to attract foreign companies.