Canada’s corporate ethics czar launches forced labour probes into Nike, Dynasty Gold in China

Ottawa's corporate ethics watchdog has announced investigations into a gold mining corporation and the Canadian branch of Nike over the possible use of forced labour by China's Uyghur minority in their supply chains.

"These are very serious issues that have been brought to our attention," Sheri Meyerhoffer, who is the Canadian ombudsperson for Responsible Enterprise, told reporters Tuesday.

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

The probes are the first investigations her office has launched since it was created by the Liberals in 2018.

The announcement follows sustained criticism by advocates, MPs and Meyerhoffer herself that Prime Minister Justin Trudeau's government did not give the ombudsperson enough teeth to hold companies to account.

In one assessment report, Meyerhoffer accuses Nike Canada Corp. of not sufficiently answering claims that it is sourcing products created through slave labour.

Her report says Nike rejected initial mediation, arguing its global parent company had already disproven allegations by the publicly funded Australian Strategic Policy Institute about specific suppliers with whom Nike says it no longer has ties.

Meyerhoffer said Nike hasn't weeded out the possibility that it has bought components through a supplier in Vietnam that could be using cotton originating downstream from slave labour in China's Xinjiang region.

"The complex nature of garment supply chains may warrant investigation," Meyerhoffer's report argues, particularly because Nike "has provided limited detail about the nature and scope" of its traceability protocols, such as how it tracks the origin of fibres used in its products.

Meyerhoffer's other report accuses Dynasty Gold Corp. of allowing forced labour to occur at its gold mine in the Hatu district bordering Kazakhstan, close to what China has called "detention" centres or "re-education" camps.

China insists those centres are meant to weed out Islamic radicalization after several deadly domestic attacks.

But the United Nations found in mid-2022 that China had committed "serious human rights violations" against Uyghurs and other Muslim communities that "may constitute international crimes, in particular crimes against humanity."

Meyerhoffer's report says that after months of attempts by her office to contact someone at the Vancouver-based company, the firm eventually argued that it does not have control over that mine.

But Meyerhoffer noted this is contradicted by statements in corporate documents and press releases.

The firm "appears to have deliberately avoided participating in and co-operating with the (office's) dispute resolution process without providing any explanation," the report reads.

The two probes stem from complaints brought by a coalition of two dozen human-rights groups, which Meyerhoffer said had also been open to an outcome in which their complaints were resolved without the companies being named publicly.

The Canadian Press has reached out to both companies and the Chinese embassy in Ottawa for comment.

Meyerhoffer said she plans to publish 11 more reports in the coming weeks on cases involving Uyghur people.

"This is a warning sign for the government of Canada, Canadian corporations and also the Canadian public to exercise due diligence of what they're purchasing," said Mehmet Tohti, head of the Uyghur Rights Advocacy Project.

The group was part of the coalition that filed the complaints.

Tohti says cotton and tomato goods from China may be products of Uyghur slave labour, and he has criticized Ottawa for barely seizing any shipments of goods produced through forced labour. Opposition parties have noted the U.S. seized hundreds of shipments.

"In Canada, we became a dumping ground because we allowed all products made by the use of Uyghur forced labour," Tohti said, adding that Meyerhoffer is probing "a major Canadian company" as part of the 11 reports she is drafting.

If the office finds any company responsible for forced labour, Meyerhoffer can recommend that Ottawa withdraw existing trade services, bar the firm from receiving government funds or have border guards seize imports.

"The greatest power that the (office) has is to shine a light on situations involving human rights that would not otherwise come to the attention of the Canadian public or the Canadian government," she said.

The ombudsperson has also been assessing for months whether to investigate alleged violations of the right to a living wage for workers at Canadian-controlled garment factories in Bangladesh, and the right of assembly for garment workers in Honduras.

The Liberals promised to create the ombudsperson role in the 2015 campaign, replacing a post Stephen Harper's Conservative government created in 2009 that was restricted to advising the extractive sector and monitoring its corporate policies.

They enacted the new office in 2018, allowing it to probe garment industries as well as the mining,oil and gas sectors.

Meyerhoffer, a lawyer whose career focused on international development as well as Alberta's oil sector, was appointed a year later. But she only started accepting complaints in 2021 and had not launched any formal investigations until Tuesday.

The office has long faced a debate over how much power Meyerhoffer needs to do more rigorous work.

Advocacy groups such as the Canadian Network on Corporate Accountability have long called for the legal right to compel documents and witnesses from companies, as has an external legal review commissioned by Ottawa.

Meyerhoffer herself told media in November 2019 that she'd be asking the Liberals for such powers, and said the inability to compel companies left people fearing retribution if they filed complaints with her office. She was tight-lipped Tuesday as to whether the Trudeau government had responded to her requests.

NDP foreign-affairs critic Heather McPherson has tabled a bill to give the office such powers and compel businesses to better track their supply chains.

"Impacted communities and civil society groups do not trust the (office) to represent their interests adequately without these powers," McPherson said in a statement.

"The Liberal government broke their promises and has refused to give the office the tools to act with the urgency these complaints need, or introduce any legislation to hold companies accountable."

Meyerhoffer's office monitors the roles of any entity controlled by a Canadian firm directly or indirectly, which includes foreign suppliers and contractors who only work for a company based in Canada.

It has conducted reviews of issues abroad, such as an analysis of 10 Canadian garment companies operating outside the country. It found few tracked supply chains well enough to detect child labour, since many only monitor their systems in steps that follow the production of raw materials.

This report by The Canadian Press was first published July 11, 2023.