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Brazilian state awarded contract to firm on slave labor 'dirty list'

by Fabio Teixeira and Alfredo Mergulhao | @ffctt | Thomson Reuters Foundation
Monday, 15 June 2020 05:01 GMT

FILE PHOTO: An employee works at the construction site of a residential building, amid the coronavirus disease (COVID-19) outbreak, in Sao Paulo, Brazil, April 1, 2020. REUTERS/Rahel Patrasso

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Construction company in Sao Paulo won $2.4 million government contract despite being blacklisted on Brazil’s anti-slavery list

By Fabio Teixeira and Alfredo Mergulhao

RIO DE JANEIRO, June 15 (Thomson Reuters Foundation) - A Brazilian construction company won a government contract despite being blacklisted on the country's slave labor "dirty list", the Thomson Reuters Foundation can reveal, fuelling calls for laws to ensure businesses could not bypass the register.

Considered one of Brazil's most powerful anti-slavery tools, the dirty list features about 180 companies that were found by labor inspectors to have engaged in slave labor.

Blacklisted businesses cannot receive state loans and have restrictions placed on their sales, while the list - established in 2004 - is also used by private banks to gauge credit risk and by international buyers concerned about their supply chains.

Yet an analysis based on exclusively obtained records found Emae, a company owned by Sao Paulo state, awarded a contract to Soebe Construçao e Pavimentaçao in July 2019, about nine months after the firm was added to the list for enslaving 10 workers.

While it is not illegal for state governments to hire blacklisted firms, labor inspectors and prosecutors said it was another example of the list's limitations and need for states to pass laws to make the register more than a "transparency tool".

"State governments must put into law that firms on (the dirty list) cannot be hired," said Brazil's top anti-slavery prosecutor, Lys Sobral Cardoso.

The Ministry of Economy, which publishes the list, declined to respond to questions from the Thomson Reuters Foundation.

"(The government is) saying that it will not look at the dirty list when hiring," said labor inspector Liane Durao.

"This is ... encouraging (slave labor)," added Durao, one of the inspectors who found Soebe's workers going without pay and living in substandard conditions with no beds or running water.


Emae, the state-owned firm that manages hydroelectric plants and dams, said it would start requiring potential subcontractors to show they were not blacklisted before bidding for contracts.

Yet it said Soebe's bid was not illegal, and a spokeswoman for Sao Paulo said the firm was still contracted by the state.

Soebe, which won the R$ 13 million ($2.4 million) bid in partnership with another company to clean up the Pinheiros river, denied using slave labor and said the rescued workers had been employed by one of its subcontractors.

"The inclusion of Soebe ... was unfair, mistaken and the constitutional guarantees of due legal and contradictory process were not observed," the company said in emailed comments.

The firm was removed from the list in February when it won a court injunction overturning its inclusion by labor inspectors. It could be re-added to the register if it loses an upcoming court appeal against the inspectors' findings of slave labor.

"It is no use for us to do all this work and see an injunction go and remove it," said labor inspector Durao.

"The work almost loses its meaning."

Last year, 1,054 workers in Brazil were found in slavery-like conditions, down from 2,775 in 2012, government data found. Since 1995 about 54,000 have been uncovered by labor inspectors.

The 2018 Global Slavery Index estimated that 369,000 people were living in slavery among Brazil's population of 205 million.


Data obtained via Brazil's Access of Information Law also revealed that about 130 companies including Soebe had used court injunctions since 2004 to either halt their inclusion on the dirty list pending an appeal or have their name removed.

Businesses found by the government to have used slave labor are placed on the list for two years, after which time they are removed if no further cases of modern slavery are discovered.

Many firms that have taken out injunctions in recent years said they did so because they had not been able to challenge the initial decision, and were concerned about the financial fallout of being added to the list without due process.

Some said the working conditions did not amount to slavery; others that they should not have been held responsible as laborers were not directly hired by them but by subcontractors.

In Brazil, slavery is defined as forced labor - but this also covers debt bondage, degrading work conditions, long hours that pose a health risk, and work that violates human dignity.

While there is no suggestion of wrongdoing regarding the use of injunctions, prosecutors and judges said the practice weakens the list as some firms avoid exposure over slave labor findings.


Brazil's top anti-slavery prosecutor, Lys Sobral Cardoso, said judges were often "very quick" to grant such injunctions.

"We are surprised by the nature of some decisions," she said. "Of those that I followed, I did not agree with any."

Of the 130-odd firms granted injunctions, at least 23 were later found by the courts to have not used slave labor - overturning the initial findings of labor inspectors.

Many Brazilian judges lack knowledge about the dirty list and end up ruling in the favour of companies over labor inspectors with injunction applications, said Paula Nunes, a lawyer for the anti-slavery non-profit Conectas Human Rights.

"Companies file lawsuits alleging that they weren't granted the right to make their case, when it is not true," said Nunes.

"(It is) ... undermining this very important instrument."

The National Council of Justice (CNJ) did not respond to a request for comment. The government body last year said all new labor judges must attend classes on slave labor as part of a drive to raise awareness about the issue and the dirty list.

Senator Paulo Paim, who proposed a bill to ban public contracts being given to blacklisted firms that was shelved in 2018, urged Emae to reconsider its relationship with Soebe.

And Paim, head of the Senate's human rights commission, said he feared little could be done to stop the use of injunctions.

"We are talking about millionaires here, who can evade (exposure over) heinous crimes and slavery," Paim added.

Related stories:

Brazil's anti-slavery rescuers resume raids after coronavirus halt

Easing labor laws in Brazil seen putting workers at risk in pandemic

Brazil to issue 'dirty list' of employers using slave labor based on court findings

(Reporting by Fabio Teixeira @ffctt; Editing by Kieran Guilbert and Belinda Goldsmith. Please credit Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, women's and LGBT+ rights, human trafficking, property rights, and climate change. Visit www.trust.org)

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