EXCLUSIVE: Cocoa giant in Brazil slave labour probe says it can't trace supplies

by Fabio Teixeira | @ffctt | Thomson Reuters Foundation
Thursday, 12 August 2021 13:00 GMT

A cocoa tree bearing fruit is seen in a plantation in a farm in Medicilandia, Para state, Brazil, March 19, 2018. Picture taken March 19, 2018. REUTERS/Marcelo Texeira

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Olam International is being sued by Brazilian prosecutors for allegedly failing to address labor abuses in its supply chain

By Fabio Teixeira

RIO DE JANEIRO, Aug 12 (Thomson Reuters Foundation) - One of the world's top cocoa processors has told a Brazilian court investigating child and slave labor it cannot trace its supplies, contradicting its own public statements and raising fears exploitation may be going unchecked.

Olam International is one of three food companies being sued by Brazilian state prosecutors for allegedly failing to address labor abuses in their supply chains.

The company denies the charges, which stem from a 2018 report by Brazil's Federal Labor Prosecution Office and the International Labor Organization that showed widespread use of child and slave labor in Brazil's cocoa industry.

But in its statement to the court in April, Olam's lawyers said cocoa beans that were passed from farmer to middle man before being bought by the company were "not liable to tracking".

"You don't know the origin, you can't control the origin," said the submission, given exclusively to the Thomson Reuters Foundation. "There is no way for the buyer of the commodity to know where it came from."

In contrast, Singapore-based Olam's website offers its customers a guarantee that they can buy its chocolate knowing that "it has been produced in a way that supports the most vulnerable people and environments in the supply chain".

In a post on the Olam site, the head of the cocoa business Gerard Manley said the company could trace its cocoa all the way from the farm to its processing facilities across the world.

"That's the equivalent of tracking approximately 12% of the world's cocoa beans," he wrote.

A man walks past a logo of Olam International Limited at its office in Singapore November 29, 2012. REUTERS/Edgar Su (SINGAPORE - Tags: BUSINESS LOGO)

DAMAGES

Brazilian prosecutors filed the lawsuit in January and are seeking about R$ 300 million ($58 million) in damages from Olam.

They say they have proof of child and slave labor in Olam's supply chain, and want the company to be made to take measures including cutting out the middle men, setting up formal contracts with farmers and organising periodic inspections for labor abuse.

Invoices attached to the lawsuit show the company bought cocoa from a farm in Brazil where nine workers were found in slavery-like conditions in 2017.

In a statement, Olam said it could not comment on the ongoing litigation, but added, "we vehemently deny the allegations made in this action and maintain that they have no merit in fact or law".

The company has previously said it has "zero tolerance for forced labour" and would "immediately act, including notifying the appropriate authorities", if any cases were identified in its supply chain.

The 2018 report on which the lawsuit is based uncovered thousands of instances of child labor and found farmers were being forced to work to pay off debts to landowners.

Brazil defines modern slavery as debt bondage, degrading work conditions, long hours that pose a risk to a worker's health or life, or work that violates a person's dignity.

Margarete Matos de Carvalho, who is prosecuting the case, said buying from middlemen had enabled Olam to evade responsibility for abuses.

"We have abundantly proved the presence of child labor and slave labor (in Olam's supply chain), but they close their eyes to this reality, while at the same time proclaiming and trumpeting their commitment to these issues," she said.

Carvalho spoke to the Thomson Reuters Foundation following a sucessful appeal last month against the judge's decision to seal all the documents relating the case.

That decision was subsequently overturned, but Carvalho gave her permission for her comments to be published even if the restrictions were reimposed.

The Thomson Reuters Foundation obtained the court documents during the brief period when they were unsealed.

In its submission, Olam said 90% of its cocoa in Brazil came from "indirect suppliers" - farmers who sell their beans to middle men, who in turn sell them to Olam for processing - making it impossible to trace the beans.

The company has previously said it is capable of tracing 100% of the cocoa that it sources directly.

"It is obvious that cocoa purchased from a place and sent to couriers, cooperatives, cereal producers, local warehouses and so on until it reaches a final buyer, is not liable to tracking," said the company's lawyers.

Court documents related to the two other companies named in the lawsuit have not been made public.

"The secrecy, in my view, is to preserve the image of the companies," said Carvalho.

"To us, it's important for the public to know the perverse origins of this product. It's against public interest to maintain the secrecy."

($1 = 5.2154 reais) (Reporting by Fabio Teixeira @ffctt; Editing by Claire Cozens. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers the lives of people around the world who struggle to live freely or fairly. Visit http://news.trust.org)

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