Malaysia: ‘Slavery’ found at a Malaysian glove factory. Why didn’t the auditor see it?

In December 2020, with coronavirus infections spreading rapidly across factories and workers’ dormitories in Malaysia, officials raided latex glove maker Brightway Holdings near Kuala Lumpur. They said they found workers living in shipping containers, under conditions so squalid that human resources minister M. Saravanan later likened them to “modern slavery.”

Nineteen months earlier, inspectors from a social-auditing firm – private contractors that help companies monitor environmental, social and other ethical standards in industries from toys to palm oil – had visited the same three facilities. In three reports over 350 pages, they had detailed 61 violations of global ethical standards and checked boxes for 50 violations of Malaysian labour laws.

Even so, the executive summary of each report concluded: “There is no forced, bonded or involuntary prison labour hired in this facility.”

Brightway’s customers include some of the world’s biggest suppliers of personal care and protective equipment. The company’s managing director, G. Baskaran, shared the audit reports from 2019 and 2020 with Reuters in April, saying they show that “we did not practice any form of forced labour or modern slavery.”

These contrasting conclusions highlight little-known flaws in global efforts to monitor labour conditions. Social audits – independent reports used by global brands to test that their suppliers meet ethical norms – are not always effective in identifying labour risks, and can even obscure them, more than two dozen auditors, oversight bodies, factory workers and labour rights groups told Reuters.

Laws around the world prohibit the use of forced labour, but no rules govern the quality of audits, which are voluntary, audit firms told Reuters. Auditors are usually paid by the firms they are auditing, raising potential conflicts of interest if inspectors feel compelled to give positive reports to retain business. Beyond this, inspectors and Brightway workers told Reuters, companies can manipulate what auditors see on site.

There is no evidence of any impropriety by the auditor Brightway hired, British firm Intertek Group, which declined to comment on Brightway. Intertek said its audits meet stringent operational procedures with rigorous standards and are themselves subject to regular and thorough independent audits. It did not say by whom.

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