Leaked Audit: Nike Factory Violated Worker Laws

A confidential audit of a Nike factory in Vietnam reveals a toxic sweatshop -- and a new report details more abuses
Plus: Exclusive photos from inside the factory

| Fri Nov. 7, 1997 4:00 AM EST

Read excerpts
from the audit



See photos
of the sweatshop



Read the TRAC
report on abuses
at this factory


November 7, 1997
9:00 p.m. P.S.T.

Nike factory workers in Vietnam were exposed to toxic chemicals without protection, made to work illegal excess overtime, and exposed to other workplace hazards, according to a confidential audit made public today. A new report by a San Francisco watchdog group details further abuses at the contractor factory.

The leaked audit, commissioned by Nike and prepared by the accounting firm Ernst & Young in January, found that workers at the Tae Kwang Vina Industrial Co. (TKV) factory were exposed to illegal levels of toluene and acetone without protective clothing or safety training, and made to work excess overtime hours in violation of Vietnamese law.

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Ernst & Young also reported poor ventilation, high levels of respiratory illness in areas where toxic chemicals were used, lack of drinking water, poor fire safety, and other hazards at the TKV plant, one of five Nike contractor factories in Vietnam.

The audit, the first of its kind to be made public, raises new questions about the widely publicized report issued in June by Andrew Young, former U.S. ambassador to the United Nations. Young's report -- also commissioned by Nike -- largely exonerated the company and its labor practices overseas. In it Young noted that he had access to the secret Ernst & Young audits, and expressed his confidence in them. He made no mention of problems with hazardous chemicals at any factory. Young did not return calls Friday.

The quality of the audit also raises questions about the competence and independence of third-party auditors hired by the corporation. Despite their findings that TKV violated Vietnamese environmental and labor laws, Ernst & Young inexplicably concluded that the site complied with Nike's Code of Conduct -- which says contractors must obey those laws.

"This is not an audit -- Ernst & Young was hired by Nike to perform certain tasks that Nike wanted performed," said Thuyen Nguyen, director of Vietnam Labor Watch. "It's disingenuous for Nike to hire an auditor and call them an 'independent monitor.'"

"I would not in any shape or form call this professionally sound or rigorous," said Garrett Brown, M.P.H., a worker health and safety compliance inspector for the State of California who has reviewed the Ernst & Young audit. "None of the authors appear to have any professional training or experience in occupational safety and health."

The Ernst & Young audit was leaked by a TKV factory worker to Dara O'Rourke, a consultant with the U.N. Industrial Development Organization in Vietnam. O'Rourke visited the factory three times this year and found more evidence of labor abuses, documented in a new report released today by the Transnational Resource and Action Center (TRAC), a San Francisco watchdog group. In confidential interviews conducted away from the workplace, TKV workers told O'Rourke of forced overtime, physical and verbal abuse, and violations of Vietnamese laws on pay and overtime.

In a hastily arranged press conference this afternoon, Nike officials did not dispute the Ernst & Young findings, but said the company had taken concrete steps to fix the problems. Workers at the TKV factory no longer work excess overtime, said Dusty Kidd, labor practices manager for Nike. "You'll find now that no worker in that factory works more than 200 hours overtime a year."

Nike officials also said the contractor has fixed ventilation problems and given workers protective gear. But they admitted they haven't checked to see if toxic chemical levels were still too high. "We haven't had the capability to do scientific measurement," said Tien Nguyen, Nike's labor practices manager in Vietnam, "so we don't really know the exact number."

Nike officials had not yet reviewed O'Rourke's report.

O'Rourke says illegal and unsafe conditions persist. "I last visited the factory in June, and I last spoke with workers in October. The conditions have not been solved. As of October, workers told me that forced overtime and unprotected exposures have not been resolved."

The release of the audit and the TRAC report were timed to coincide with next Tuesday's meeting of the White House anti-sweatshop task force, the Apparel Industry Partnership. The task force, made up of corporations and human rights groups, has proposed a nonprofit association to implement a code of conduct on sweatshops. It is still mulling guidelines on the independent monitoring of contractor factories like Nike's.

Task force co-chair Linda Golodner, president of the National Consumers League, confirmed the group is still undecided on the confidentiality of independent monitoring. "We're aware of companies' need for proprietary information, but we need a balance so that consumers trust the association, and companies trust the association."

Golodner said she had not seen the Ernst & Young audits of Nike factories -- or any other independent audit of any apparel or shoe factory.

The complete TRAC report "Smoke from a Hired Gun" and the leaked Ernst & Young audit are available in searchable text format on the Corporate Watch Web site.

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