Korean Government Breaks with the OECD, United Nations with Assertion That Companies Have No Responsibility for Human Rights in their Supply Chains

Daewoo International approaches 20 years of knowingly buying forced labor cotton in Uzbekistan

August 3, 2015: This month the government of Korea rejected a petition to investigate Daewoo International, the multinational company that has repeatedly admitted it uses forced labor cotton in its operations in Uzbekistan. The Korean government’s decision calls into question whether it is fulfilling its duties as a member of the Organisation for Economic Cooperation and Development. Daewoo’s failure to fulfill its due diligence responsibilities presents investors with an unacceptable risk of complicity in human rights violations.

"Despite the continuous requests to abide by the international community's standards through Parliamentary Inspection, the decision from Korean NCP to simply dismiss the case was very disappointing. I am sincerely concerned about the practice to dismiss the case without further examination by Korean NCP." said Chun Soonok, Member of the National Assembly of the Republic of Korea.

As a member of the OECD, the Korean government has a duty to work proactively to ensure Korean companies ensure that forced labor is not in their operations; avoid contributing to human rights violations and address violations that occur; and identify, prevent and mitigate actual and potential rights violations, including those linked to the company by a business relationship. Since 2000 all members of the OECD have accepted complaints from people harmed by multinational companies’ noncompliance with these standards, known as the OECD Guidelines, through offices in each member state known as the National Contact Point (NCP).

In December 2014, Korean Transnational Corporation Watch, Anti-Slavery International and the Cotton Campaign petitioned the Korean NCP to investigate Daewoo International’s admitted purchasing of forced-labor cotton in Uzbekistan and to facilitate mediation to address Daewoo’s breaches of the OECD Guidelines. The complaint presented evidence of systematic forced labor in the cotton sector in Uzbekistan. The International Labour Organization, United Nations Human Rights Council, UN Committee on the Rights of the Child and UN Committee Against Torture have all reported concerns of forced labor and child labor and urged the Uzbek government to end the practice. The complaint also noted that Daewoo has operated cotton processing facilities in Uzbekistan since 1996, has reported it purchases 20% of all cotton processed in Uzbekistan, and repeatedly admitted it knows that cotton used in its Uzbek operations is produced with forced labor.

In July 2015, the Korean NCP closed the petition, claiming that Daewoo’s purchasing of forced labor cotton from the Uzbek government does not impact the government’s practice and that Daewoo has “performed due diligence duties on human rights required by the Guidelines.” The NCP cited reports from Daewoo that it conducts internal monitoring and has raised the issue with the Uzbek government.

The NCP announced its decision after receiving evidence of continued government-compelled forced labor in Uzbekistan’s cotton sector. In 2014, the government forced more than a million citizens to harvest cotton and farmers to grow cotton, all under threat of penalty. In only the first half of this year, the Uzbek government forced thousands of citizens to prepare cotton fields for planting, brutalized citizens attempting to document forced labor and deported an international labor expert simply for informing a legally registered human rights group about international labor conventions.

The NCP decision directly contradicts a core principle of the OECD Guidelines, which are also promoted by the United Nations as the UN Guiding Principles on Business and Human Rights. Daewoo’s purchases all the cotton used in its cotton processing facilities in Uzbekistan from the Uzbek government, knowing that the government uses forced labor to produce the cotton. Internal and nontransparent discussions with the government are both inadequate and have not changed the fact that Daewoo has purchased forced labor cotton for nearly 20 years and continues to do so.

KTNC Watch, Anti-Slavery International and the Cotton Campaign call on the OECD to investigate whether the Korean government is fulfilling its duties to promote the Guidelines through the NCP. We note that the Korean NCP decision to ignore Daewoo’s breaches of the Guidelines fits a pattern. The Korean NCP has never fully investigated any specific instance of alleged breaches of the OECD Guidelines by Korean companies.

We also call on the investors to cease current and future investments in Daewoo and its parent company Posco until they fulfill their human rights due diligence duties in their Uzbek operations, by:

1. Suspending purchases of cotton from Uzbekistan until the ILO verifies that the government of Uzbekistan has ended its forced-­‐labor cotton production system, and

2. Establishing independent monitoring and public reporting on human rights risks and violations in Daewoo’s cotton supply chain in Uzbekistan.