William Nee | Hong Kong Free Press

Before the first roulette wheel was spun at Imperial Pacific’s new casino in Saipan, thousands of people had already lost out.

In 2017, shortly after the facility opened on the island, part of a US commonwealth in the Pacific, a US federal government investigation found that Metallurgical Corporation of China (MCC) – the project’s general contractor and a subsidiary of a Chinese state-owned conglomerate – had underpaid millions of US dollars to hundreds of construction workers.

A few months ago, several former MCC employees sued the company for forced labor, human trafficking, and failing to compensate them for the physical injuries they suffered while working on the casino project. A company manager also spent time in jail for violating federal immigration and employment laws.

MCC is listed on the Hong Kong Stock Exchange (HKEX), which, since 2013, has required listed companies to file an annual “Environmental, Social and Governance” (ESG) report on human rights risks in their operations. In theory, such reporting should encourage companies to identify problems and mitigate their effects. But there are few consequences for violators and many companies do not comply.

Amnesty International reviewed the ESG reports filed by MCC for 2016, 2017 and 2018, as well as the company’s corporate social responsibility (CSR) reports for those years but found no mention of the project in Saipan – let alone the abuses that occurred there.

Adding insult to injury, MCC’s 2016 CSR report paints an entirely distorted picture of the company’s behaviour, stating that it “strictly abides by the [local] labor laws and regulations”, “opposes forced labor”, has a “safety first” policy, and is committed to a “healthy and safe working environment.”

Tell that to the workers on the project, who paid thousands of US dollars in recruitment fees back in China based on false promises about these jobs. After they arrived in Saipan, MCC confiscated their passports and paid them below the federal minimum wage.

MCC’s report even proclaimed that it “welcome[d] inspection and supervision”. In reality, when a federal workplace safety inspector confronted MCC about the above-average injury incidence rate on the project, MCC denied him entry to the site and only granted access after a federal court got involved. The resulting 2016 inspection found eight “serious” violations of workplace safety laws by MCC.

MCC still has not remedied all human rights abuses. While MCC contributed to compensating workers for the minimum wage violations uncovered by a federal government investigation, the 2019 lawsuit highlights that many injured workers remain uncompensated.

The Saipan case clearly shows that the CSR and ESG self-reporting systems are broken. But how can they be improved?

Rather than watching as its companies engage in human rights abuses, China could become a leader in this area by setting high standards for projects in its Belt and Road Initiative (BRI), the Chinese communist party showpiece foreign policy programme that aims to enhance global development and connectivity by investing hundreds of billions of dollars in infrastructure.

MCC initially heralded its contribution to the BRI by constructing the Saipan project, but then went quiet after its rampant abuses were exposed.

China should legally require all companies participating in BRI to carry out human rights due diligence in line with international standards. This means companies must not only file reports but also identify, prevent, mitigate and account for the human rights impacts of their (and their subsidiaries’) operations.

Chinese government agencies should be given greater powers to punish companies who fall short. Victims of human rights abuses should also be able to seek remedies against the perpetrating entities through courts or other mechanisms.

Such a scenario isn’t as far-fetched as it may sound. This past November, Beijing proclaimed that Chinese companies operating overseas must observe local laws and adhere to the United Nations Guiding Principles on Business and Human Rights.

This means performing due diligence of the human rights risks prior to and throughout a project. It also means mitigating or remedying any problems, rather than simply hiding them.

If China passed – and enforced – a law that required its companies to implement and publicly disclose such practices, it would send a meaningful signal that it was serious about protecting human rights and potentially enhance the image of the BRI.

There is no better place to start than in Saipan. Instead of whitewashing the human rights abuses that were committed, MCC should compensate those who suffered work injuries and were victims of forced labor. This would help show that BRI projects, as Beijing has proclaimed, are truly “win-win” for everyone involved.

William Nee is a Business and Human Rights Analyst at Amnesty International, based in Hong Kong.

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