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Royal Dutch Shell and slave labor

By John Donovan

In the years immediately prior to WW2, Royal Dutch Shell was a business partner both Internationally and in Germany with IG Farben, the notorious German chemical firm, supplier of Zyklon-B gas to the Nazi death camps.

IG Farben used slave labor.

Extract from Time Magazine article 12 May 1947: Most damning charge was that Farben experimented on slave labor and concentration camp inmates with “deadly gases, vaccines and related products.” To supply slave labor for its synthetic rubber plant at Oswiecim, Farben allegedly constructed a concentration camp and worked the men, women & children so hard that an estimated 100 a day died from exhaustion. The U.S. would have no trouble proving that the Nazis could not have made war without Farben.

IG Farben directors were later convicted of war crimes in the Nuremberg trials – crimes including enslavement, murder of civilians, prisoners of war, and concentration camp inmates. Farben manufactured explosives and other vital war materials, including the oil and gasoline, which fueled Nazi tanks and planes used in the blitzkrieg.

There is some evidence that Royal Dutch Shell’s German subsidiary company also used slave labor.

Extract from a Boston Globe article “Cloaked Business” 19 November 2001: Newly declassified United States intelligence records reveal in unprecedented detail how US and Allied firms systematically used backwater countries to conduct backroom business with Axis enterprises. The files peel away a whole new layer of collaboration, describing scores of so-called “shadow agreements” in which corporations disguised their ties with the enemy through the cover of other companies in neutral countries, from Spain to Sweden to much of Latin America. The report said the two men also ran a steamship company that chartered tankers for Royal Dutch Shell, a Nazi collaborator that used Hitler’s slave laborers.

In 1986, Shell was accused of using slave labor in South Africa.

Extract from a Chicago Sun-Times article “U.S. unions urge boycott of Shell to fight apartheid”: The unions contend Royal Dutch/Shell, the world’s second largest multinational company in terms of sales, employs black slave labor in South Africa’s Rietspruit coal mine, of which it owns 50 percent with a South African firm.

Shell has now got into bed with Cosan S.A. – a ruthless company accused of using slave labor.

Related Bloomberg article: Cosan Falls on Slavery Charges

Another related article: Shell makes deal with Cosan in brazil despite slave labour claims (published 3 February 2010)

More information is provided in this extract of a May 2011 report published by Friends of the Earth Netherlands.

From pages 22, 24, 25 & 26 of “Royal Dutch Shell and its sustainability troubles” – Background report to the Erratum of Shell’s Annual Report 2010

The report is made on behalf of Milieudefensie (Friends of the Earth Netherlands)
Author: Albert ten Kate: May 2011.

On 25 August 2010, Royal Dutch Shell and the Brazilian sugar and ethanol producer Cosan S.A. have signed binding agreements to form a joint venture in Brazil. The definite formation of the joint venture is expected to occur in the first half of 2011. The name of the joint venture will be Rai?zen. “Due to the size of its operations, Rai?zen will help sugarcane ethanol, a sustainable, clean and renewable source of energy, to consolidate itself worldwide and strengthen Brazil‘s position in the international biofuels trading business,” stated its appointed Chief Executive Officer, Vasco Dias.

Case 4b Bad labour conditions sugarcane harvesters

Cosan’s short-lived inclusion into the “dirty list” of slave labour

On 31 December 2009, Cosan had its name included into the “dirty list” of slave labour published by the Ministry of Labour and Employment (Ministe?rio do Trabalho e Emprego, henceforth MTE). The inspection resulting in Cosan’s inclusion in the “dirty list” took place in June 2007, at the Junqueira processing plant in Igarapava, Sa?o Paulo, when 42 workers were freed.

Right after MTE’s announcement, the Brazilian Social and Economic Development Bank (state agency, Banco Nacional de Desenvolvimento Econo?mico e Social, BNDES) and private company Walmart announced the cancellation of their business with Cosan. On 8 January 2010, Cosan’s lawyers succeeded in withdrawing the name of the company from the list, in a preliminary court order. They sustained that the 42 workers caught in a situation analogue to slavery had been hired by an outsourced company and their situation was not known to Cosan’s representatives. BNDES and Walmart soon resumed their business with the company. In its sustainability report 2010, Cosan stated that during the two-and-halve years before the inclusion to the dirty list, inspection reports had not referred to forced or compulsory labour, but rather to mere labour irregularities. At the end of 2010, Cosan made an agreement with the prosecutor of the federal government. In most cases, the prosecutor would appeal preliminary court orders, such as the order of 8 January 2010. Part of the agreement, however, was that the proscecutor would not appeal the court order. Opponents of the agreement stated that the prosecutor had set a precedent. Other companies would now also try to get excluded from the list through agreements with the procecutor. The possibility to reach an agreement could reduce the effectiveness of the “dirty list”, Brazil’s main instrument to combat slave labour.

Lui?s Ina?cio Adams, the head of the federal prosecutors office, stated that the arguments of the opponents were “legitimate”, but that the Cosan case was “exceptional”.

Slave labour quite common in Brazil’s sugarcane industry

Situations of slave labour are quite common in Brazil. Presently, about 4,000 workers per year are rescued. In 2009, the sugarcane industry was leader in number of slave labourers freed by inspection groups. A total of 1,911 workers in 16 cases were rescued, 45% of the total of 4,234 people freed during the whole year.

A review by the Ministry of Labour and Employment (MTE) shows that since the establishment of a Special Mobile Inspection Group in 1995, almost 39,000 workers were rescued in Brazil from a situation analogous to slavery. Between 1995 and 2002 there were almost 6,000 rescues, while between 2003 and 2010 there were almost 33,000 rescues. The review shows a significant increase in numbers from 2003 when Brazil launched the first National Plan for Eradication of Slave Labour.

As of March 2011, 211 companies were listed on the “dirty list” of slave labour. It should, however, be noted that Brazilian law defines forced labour or “slave like” or “degrading” conditions more broadly than the International Labour Organization (ILO) of the United Nations. Consequently, a company cited for violations of the Brazilian labour code is not necessarily guilty of employing slave labour, but may in fact have fallen short in some other area.

Sugarcane workers do not live where they work. Many migrate from the North-east, the poorest region of Brazil, to Sa?o Paulo State, the richest part of the country. Industry studies show that outsourced workers suffer worse conditions than their direct hire counterparts. The worst situations occur on small plantations that use out-sourced labour. Apart from the working conditions, many sugarcane cutters risk losing their job. Most of the large producers are replacing sugarcane cutters with harvesting machines, in order to improve efficiencies and to reduce sugarcane’s carbon footprint. With machines, the sugarcane fields no longer need to be burned to enable manual cutting. Mechanization destroys many of the cane-cutting jobs and leaves thousands unemployed.

Recent example: the rescue of fourteen farm workers

In July 2010, fourteen farm workers from Pernambuco state were rescued. The cane cutters worked for the Santa Lu?cia farm in Santa Cruz do Rio Pardo (Sa?o Paulo state), a supplier to Cosan. The payments of wages were delayed for more than 15 days and there was no drinking water on work sites. In statements to the prosecutor, the workers said they were cheated by the employer, since they received half of the promised wages. Not satisfied with the working conditions and housing, the cutters stopped their activities of cutting sugarcane. Subsequently, the employer cut off the electricity and water within the cottages. After days without pay and without being able to work, workers reported the situation to the local prosecutor in Bauru.

When verifying the veracity of the complaint, through interviews and records of the degrading conditions on the scene, the prosecutor proposed the signing of a Terms of Adjustment of Conduct (TAC). The agreement stated that the Saint Lu?cia group would terminate the employment contract of all migrants and pay the workers their rightful salary.

In addition, the company had to pay BRL 300 to each worker for the transport to the state of Pernambuco and BRL 264.50 for individual moral damages. Cosan stated that it would examine the events and examine the immediate disqualification of the supplier on its list of sugarcane suppliers.

Cosan’s recent labour irregularities

At the peak of the crop year ending 31 March 2010, Cosan had nearly 41 thousand employees.

Of this total, about 27 thousand employees were seasonal. More than 33 thousand employees work in the operations sector, especially migrants working on manual sugarcane harvesting. According to Cosan, a manual harvest worker effectively works 6 hours and 45 minutes a day and is paid around EUR 250 a month.

According to Cosan, in the 2010/2011 crop year, 100% of harvest workers working on land owned or leased by the company are Cosan’s own employees. In addition, approximately 80% of cane purchasing operations with third parties started to be performed by labour contracted directly by Cosan. Cosan states that by contracting labour directly it minimizes the risk of non- compliance with labour legislation, as the company has carried out intensive work to reduce possible non-compliance in its relationship with the workers. While the company seems to take some supply chain responsibility with regard to its sugarcane purchasing operations, in its sustainability report 2010 Cosan did not refer to any supply chain responsibility with regard to the ethanol it purchases directly from third parties. As the company is also a main trader of ethanol it doesn’t produce itself, the company should also publicly take responsibility for this part of its supply chain.

The following labour rights issues with regard to operations by Cosan have been found by the government in recent years:

? Production unit Da Barra, 2009: lack of records on workers’ entrance and exit hours; work on Sundays without a license; irregularities in Personal Protective Equipment (IPEs); and dirty bathrooms;

? Production unit Diamante, 2009: six workers without regular papers; no control on working hours; no time off on Sundays and holidays; cutting seven sugarcane streets instead of five; dirty bathrooms; irregular Labour Health Certificate, lack of a plan to assist accident victims; irregular lodging facilities; outsourced transport companies with no toilet or eating facilities;

? Production unit Bena?lcool. In June 2010, Cosan was ordered to pay a fine of BRL 26,100, because it had breached a Terms of Adjustment of Conduct (TAC). It was found that workers for the Bena?lcool Plant were subjected to work on Sundays and holidays, contrary to the established TAC. The fine was ordered by the local attorney of the Ministe?rio Pu?blico do Trabalho.

? Production unit Univalem. In July 2010, Cosan was ordered to pay a fine of BRL 2,500,000, because it had breached two clauses of a TAC signed in 2007. The breaches happened at its unit in Valparaiso (Univalem plant). The company had pledged to give at least 11 hours off time between two days of work, and not to extend the normal working day beyond the legal limit. However, according to inspectors, 65 employees were found in an irregular situation with regard to granting no rest between two days, while 32 workers were found with excess journeys to and from work.147 Irregularities at the Univalem plant had been reported yearly between 2005 and 2008.

?Production unit Serra. In 2009 Cosan had to pay BRL 200,000 due to irregularities in working conditions at the Serra plant in the town of Ibate? (Sa?o Paulo)

? During spot checks carried out during 2008 by the Ministry of labour and employment (Ministe?rio do Trabalho e Emprego, MTE) and by the local prosecutor in Sa?o Paulo (Ministe?rio Pu?blico do Trabalho, MPT) irregularities were found in 18 plants of Cosan in different counties. The prosecutor Mario Antonio Gomes stated: “We found the lack of drinking water in work areas, lack of Personal Protective Equipment (IPEs), lack of a proper place for meals, among others.”

Click on the link below to read the remainder of this section of the report and the entire report.

THE COMPLETE 73 PAGE REPORT (with reference sources)

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