Watchdog probing claims that Nike Canada, gold company benefiting from forced Uyghur labour

Canada's watchdog for corporate wrongdoing says she has enough to launch an investigation of allegations that Nike Canada and a gold mining company are benefiting from the forced labour of Uyghurs in China.

It's the first time the office of the Canadian Ombudsperson for Responsible Enterprise (CORE) has launched an investigation since the federal government appointed Sheri Meyerhoffer to the role in April 2019.

"These are very serious issues that have been brought to our attention," Meyerhoffer said Tuesday.

"Canadian companies are expected to respect Canadian standards for human rights and environmental protection when they work outside of Canada."

A coalition of 28 civil society organizations, including the Uyghur Rights Advocacy Project, launched more than two dozen complaints with her office regarding forced labour practices.

In the first complaint, they alleged that Nike Canada Corp. has supply relationships with six Chinese companies that the Australian Strategic Policy Institute (ASPI) identified as using or benefiting from Uyghur forced labour.

The think tank released a report in 2020 estimating that more than 80,000 Uyghurs had been transferred to work in factories across China. It said some were sent directly from detention camps.

Last year, the United Nations concluded China had committed "serious human rights violations" against Uyghurs and other Muslim communities, particularly arbitrary detentions that may constitute crimes against humanity.

The coalition argued there is no indication that the popular clothing company has taken any concrete steps to ensure "beyond a reasonable doubt" that forced labour is not involved in its supply chain.

In a separate complaint, the group alleges that Dynasty Gold Corp. allows for forced labour at its gold mine in the Hatu district, close to what China has called "detention" centres or "re-education" camps.

The complainants point to a statement from the mine's CEO in January 2021 that "many ethnicities, including Uyghur, were represented in all ranks of the work force."

Meyerhoffer said she assessed the two complaints and decided there was enough to dig deeper.

"On their face, the allegations made by the complainants raise serious issues regarding the possible abuse of the internationally recognized right to be free from forced labour," Meyerhoffer said in a copy of her initial assessment, made public Tuesday.

"I have decided to launch investigations into these complaints in order to get the facts and recommend the appropriate actions. I have not pre-judged the outcome of the investigations. We will await the results and we will publish final reports with my recommendations."

Nike Canada denies the allegations 

The complainants' allege that Nike Canada is the primary customer of Qingdao Taekwang Shoes Co. Ltd., a factory that reportedly employs Uyghur workers who attend classes in the evening for "vocational training" and "patriotic education."

It also said the clothing company has relationships with five other companies accused of using Uyghur forced labour:

• Haoyuanpeng Clothing Manufacturing Co. Ltd.,
• Esquel Textile Co. Ltd.,
• Qingdao Jifa Group,
• Huafu Fashion Co. Ltd.,
• Texhong Textile Group. 

Meyerhoffer's office said it made several unsuccessful attempts to make contact with Nike Canada Corp beginning in the summer of 2022. 

Earlier this year, Nike Inc., the parent company, turned down the ombudsman's request for a meeting but sent a statement saying it is "committed to ethical and responsible manufacturing and we uphold international labour standards," said the ombudsman report.

"We are concerned about reports of forced labour in, and connected to, the Xinjiang Uyghur Autonomous Region (XUAR). Nike does not source products from the XUAR and we have confirmed with our contract suppliers that they are not using textiles or spun yarn from the region," said a copy of Nike's statement. 

Meyerhoffer said there is a conflict between what Nike says and what an Australian Strategic Policy Institute report said about the factories in the region. 

For example, she said there is a contradiction with regard to Nike's claim that Qingdao Taekwang Shoes Co. Ltd. stopped hiring new employees from Xinjiang after human rights abuses were reported in 2019 by the ASPI.

CORE said it will proceed with an investigation through independent fact-finding on the Nike assertions, but added that mediation is available at any stage of the complaint process.

"Given the high-risk context, there is a need for enhanced human rights due diligence to identify, prevent and mitigate the human rights-related risks of Nike's operations," said the initial assessment report.

"In this regard, Nike Canada Corp. has not provided a satisfactory response or remedy to the allegations in the complaint, nor satisfactorily demonstrated that it conducts human rights due diligence."

Mining company 'deliberately avoided' participating: ombudsman

Meyerhoffer fared worse when trying to get Dynasty to respond despite multiple attempts

"DYG [Dynasty Gold Corp.] only provided its comments to the draft initial assessment report. Prior to that, DYG appears to have deliberately avoided participating in and cooperating with the CORE's dispute resolution process without providing any explanation," said the report.

The mining company eventually did send a comment denying it has operational control over the Hatu mine. Meyerhoffer said that might not be true given statements it has made in corporate documents and press releases.

"DYG's assertion that it terminated its mineral exploration activities in Xinjiang in 2008 does not seem to be supported by its press releases dated January 25, 2021 and April 13, 2022," says the report.

"Even if DYG does not have operational control, DYG is still responsible for ensuring that forced labour is not present in the Hatu mine over which it asserts 70 per cent ownership."

In a statement issued to CBC News, Dynasty's CEO Ivy Chong called the initial assessment "totally unfounded." 

"Like many western companies, the wages that we paid to local workers were almost double the local wages. We gave them on-the-job training, such as how to use mining software etc. Everyone was happy working for us," said Chong. 

"We don't understand on what evidence and basis that CORE conducts its investigation on Dynasty Gold Corp."

Meyerhoffer said her team won't be able to travel to the Xinjiang region to conduct their investigations.

China insists it's not committing genocide

The coalition filed 13 admissible complaints with the CORE office, Meyerhoffer said Tuesday. Her assessments on the remaining 11 will be made public in the coming weeks.

"It is our mission to resolve human rights complaints in a fair and unbiased manner in order to help those impacted and to strengthen the responsible business practices of the companies involved," she said. 

In January 2021, the federal government announced a suite of new regulations to ensure that Canadian companies are not complicit in human rights abuses or the use of forced labour in China's Xinjiang province.

Later that year, Canadian MPs passed a motion saying that China's persecution of Uyghurs and other Turkic Muslim groups amounts to genocide, according to the definition set out in the 1948 UN Genocide Convention. Prime Minister Justin Trudeau and most of his cabinet were absent for the vote.

China has called the genocide allegations "the lie of the century."

Conservative MP Garnett Genuis said it's "shameful" that the federal government hasn't recognized the Uyghur genocide.

"Over 600 shipments of goods have been denied entry to the United States over concerns about products tainted by Uyghur slave labour. Under Justin Trudeau, not a single shipment has been denied into Canada. Zero," wrote the international development critic in a media statement.

"CORE has an important role to play, but more direct leadership from the government is also required."

NDP MP Heather McPherson said Tuesday's report shows that CORE lacks teeth.

"Clearly these companies don't care. They don't feel it will hurt their bottom line," she said.

"This ombudsperson needs the power to compel testimony and witness and documentation and does not have that."