Days after German carmaker Volkswagen was cleared of using forced labour in a Chinese factory, a soap opera continued to unfold on social media, pitting the founder of the responsible audit company against his own staff.
Most employees at Berlin-based audit company Löning questioned the audit’s veracity, in an explosive posting last week on the company’s official LinkedIn account. As the company founder moved to contain the situation on Thursday, senior EU figures weighed in.
In a stunning rebuke of its own employer’s findings, a post on the Berlin-based auditor Löning’s official LinkedIn page made clear that the inspection was “overseen and facilitated” by company founder Markus Löning and another executive, Christian Ewert.
Do you have questions about the biggest topics and trends from around the world? Get the answers with SCMP Knowledge, our new platform of curated content with explainers, FAQs, analyses and infographics brought to you by our award-winning team.
“The technical audit at the facility has been conducted by two Chinese lawyers and overseen on location by Christian Ewert. No other team member from Löning participated in, supported or backed this project,” read the employees’ statement, posted on the company’s official account soon after the audit findings were announced on December 5.
Meet the shadowy agents in China’s murky world of factory audits
As the situation unfolded publicly, senior EU figures offered comment, reiterating that if there were any doubts about labour standards in a region, European companies should move elsewhere.
Many Western audit firms have withdrawn from Xinjiang, where the United Nations said Beijing has committed “crimes against humanity” and orchestrated a campaign of forced labour.
The companies have said that strict police controls in the region make it impossible to independently verify working conditions. China denies any persecution of Uygurs or other ethnic minorities in the region and refuted the UN report in full.
“The human rights situation in China and Xinjiang and the challenges in collecting meaningful data for audits are well known and are also present in this project,” read the post by Löning employees, adding that the team “has diligently worked to establish ourselves as reputable and knowledgeable experts in business and human rights”.
Markus Löning took to the comments section to defend the audit, saying the firm “stands by its assessment” and attributing the initial post to a “lively and committed team with a spectrum of views”.
“We checked the employment contracts and salary payments of all 197 employees over the last three years, conducted 40 interviews and were able to freely inspect the factory,” he wrote.
“The employees are paid above average and have little to do. The plant is only used for technical commissioning and deliveries to dealers in the region. We were unable to identify any special security measures. The situation in China and Xinjiang and the challenges in collecting data for audits are well known,” he added.
“I do not dissociate myself from the conduct or results of the audit at an automobile plant in Urumqi ... I stand by the work of my company under the conditions mentioned and which I have made public,” Löning said in a later post on the same platform.
“The audit was led and planned by our experienced senior strategy adviser, Christian Ewert, and myself. For the audit with the agreed scope, we cooperated with a mandated Chinese law firm from Shenzhen. Working with a local certified partner is mandatory for conducting audits in China by Chinese national laws,” he added.
UN report finds it ‘reasonable to conclude’ forced labour exists in Xinjiang
Nicolai Laude, a Volkswagen spokesman, said the company did “not comment on internal processes at our partners and suppliers”, but referred the Post to Markus Löning’s comments on LinkedIn. Löning did not respond to a request for comment.
Senior EU figures said on Thursday that if there was any doubt about labour standards, European companies should leave a region.
The situation unfolded on the day the EU agreed new rules around corporate sustainability due diligence which make it beholden upon European firms to ensure there are no human rights infringements in their supply chains.
At a press conference in Brussels, EU Justice Commissioner Didier Reynders urged companies to “try to avoid the use of forced labour, and in the end if it’s impossible”, go “somewhere else”.
He pointed to the fact that the EU hopes to conclude its own forced labour ban in 2024, which will be country-agnostic, but which insiders admit was designed with Xinjiang in mind.
Lara Wolters, the European Parliament’s chief negotiator on the due diligence package, said Volkswagen should be trying to “affect change” in Xinjiang, and if that is not possible, they should leave.
“When we are talking about large companies such as Volkswagen, we would want them to use the power of their large contracts and their leverage to go and affect change. Now, this might not be possible not might not be easy in every case,” Wolters said.
“There does come a point where the company needs to disengage and go elsewhere with its contracts and that we have stipulated rather extensively I think in the agreement.”
The plant in Xinjiang is a joint venture run by partner SAIC. Under pressure from rights groups, Volkswagen agreed to organise an independent audit to check for forced labour. This came after China chief Ralf Brandstaetter visited the plant himself in February, saying he found no signs of forced labour.
Jim Wormington, a senior researcher at Human Rights Watch, told the Associated Press last week that “no audit can credibly claim to have investigated labour conditions at factories” in Xinjiang because of the risk of reprisals against auditors and workers.
He said the summary of the audit provided by Volkswagen made it difficult to assess its methodology and findings.
More from South China Morning Post:
- Volkswagen stands by SAIC’s Xinjiang assembly despite rights concerns, saying it ‘looks like all other joint venture plants’ in China
- US imports of car parts with links to Chinese forced labour face legal scrutiny
For the latest news from the South China Morning Post download our mobile app. Copyright 2023.
