Canada terminates $222M PPE contract following forced labour probe

Public Services and Procurement Canada has terminated two supply contracts with Supermax Healthcare Canada following allegations that the nitrile gloves it manufactured in Malaysia for use by Canadian health care workers were made with forced labour.

Thesecontractsforsynthetic rubber medical gloves, worth over $222 million, were part of the $8 billion push led by former procurement minister Anita Anand to equipCanadian health care workers with the personal protective equipment they needed during the COVID-19 pandemic.

In November, the department announced that deliveries from thiscompany were being held until the government could review the results of an independent audit of Supermax'soperations.

"Based on the seriousness of the allegations and expected timelines for the final audit results, the Government of Canada has decided, and Supermax Healthcare Canada has agreed, to terminate by mutual consent the two existing contracts for the supply of nitrile gloves," the department toldCBC News in an email Tuesday, confirming an earlier report from Reuters that Canada'scontract with the Malaysian supplier had ended.

U.S. moved to ban shipments first

Canada's move follows action taken by U.S. Customs and Border Protection on Oct. 21.

American officials banned shipments of gloves manufactured by Supermax Corporation Bhd. and its subsidiaries based on information that "reasonably indicates their use of forced labor in manufacturing operations." The U.S. investigationidentified 10 of the International Labour Organization'sindicators of forced labour.

Malaysia provides an estimated two-thirds of the world's supply of disposable medical gloves. (China is the other major global manufacturer.)

Following public allegations last January of human rights violations and the possibleabuse of migrant workers among Malaysianglove makers, Canadian officials askedsix suppliers including Supermax more questions about how their workers were being treated.

Based on the company's initial response, Canada maintained its contracts with Supermax at first, but following the American moveit sought further assurances that it wasn't using forced labour. The company hired an independent firm to conduct a comprehensive audit of its operations.

"The Government of Canada is committed to ensuring that it does not do business with companies that employ unethical practices, either directly or within their supply chains," the department said inNovember as it put further Supermax deliverieson hold.

Taking compliance issue 'seriously': Supermax

PSPC has yet to respond to follow-up questions from CBC News about how many gloves were delivered before deliveries were put on hold, or what kind of checks the government made onthe company's employment standards before signingthecontracts.

In a statement earlier this month, Supermax said it takes compliance"seriously" and has been working to meet ILO standards since 2019. It laid out a new foreign worker management policy and other changes to its human resources practices that it said had been in effect since November2021.

The competitive global procurement racefor PPEat the start of the COVID pandemic in 2020 was describedas "the wild West."

British solicitor Nusrat Uddin said that's no excuse for countries to turn a blind eye to labour conditions she compares to "modern slavery."

Governments were warned, lawyer says

Her firm, Wilson Solicitors, is starting legal action against the U.K. government, calling for a judicial review of the decision by its National Health Service to continue to buy gloves from Supermax, notwithstanding its own pledges to crack down on forced labour.

WATCH / British solicitor Nusrat Uddin on labour conditions:

British solicitor says labour conditions in companies that make PPE akin to 'modern slavery'

3 years ago

Duration 1:39

British solicitor Nusrat Uddin says labour conditions at Supermax facilities, which make personal protective equipment, are like 'modern slavery,' and wants the U.K. to follow Canada's lead and cancel its contracts with the company.

Uddin told CBC News Tuesdaythat governments knew as far back as 2013 or 2014 that the medical glove industry in Malaysia was highly problematic and workers were at high risk of being abused.

She commended U.S. officials for taking the allegations seriously and working with groups on the ground to investigate how the migrant labourers that make these gloves are treated.

Most come from Bangladesh and Nepal, she said, and are heavily indebted from paying problematic "recruitment fees" to their employers. Their families depend on them to send income home, but they are economically dependent on their employer.

Their work days are long and hot;Malaysia only recently changeditslawto prohibit working seven days a week. Uddin said she's seen evidence of workers housed in row upon row of bunks in overcrowded accommodations.

She said the workers' movements were restricted during the pandemic. Some had their passports taken away and were unable to leave their employer's premises for up to 18 months, she added.

"It's an extremely complex and sophisticated system of controlling the workers and exploiting them for the billions of profits that are being made off their backs in this global pandemic," she said.

U.S. leading push to crack down

Americans led on this issue by banninggloves from five Malaysian manufacturers, Uddinsaid. Previously, due diligenceaudits only operated on asurface level.

When buyers from rich countries look deeper and start cutting companies off one by one, Uddinsaid,it becomespossible to start changing industry norms.

The U.S. now is pushingclose trading partners like Canadato crack down on forced labour.

Whether it resulted fromAmerican pressure or not, Canadians should be proudto see thesecontracts terminated, she said.

"We can't simply protect our own people by exploiting other people," she said. "The world is becoming smaller. We're really understanding how many of our products whether it's in our supermarkets ...our clothes ...now our medical supplies are really tainted with the exploitation of others around the world."

Canada only finalized changes to its procurement code of conduct to prohibit the use of forced labour by government suppliers a few months ago.

Butthe use of forced labour is prohibitedin several of Canada's current trade treaties including the revised North American trade deal that Canada works withU.S. and Mexican officials to enforce.

Canada struggling with enforcement

The Comprehensive and Progressive Trans-Pacific Partnership (CPTPP) also bans the use of forced labour. Malaysia was one of its original signatoriesbut ithas yet to ratify and implement the agreement. Canada ratified the CPTPPin 2018 and was one of the original six partners when it entered into force at the end of that year.

Canada's currently in trade negotiations with the Association of Southeast Asian Nations, (ASEAN), of which Malaysia is a member. Trade Minister Mary Ng calls Canada's trade deals "high-standard agreements" when it comes to things like protecting workers' rights, suggesting that any deal ASEAN reaches with Canada would include a labour chapter that reflects Canada's progressive values.

The allegations against this glove manufacturersuggestsome ASEAN partners may struggle to match and enforce ambitious standards.

But Canada is also struggling to keep products made with forced labour out of its domestic market.

Last year, an investigation by CBC's Marketplace revealed that Canadian retail giant Reitmans Ltd. was selling clothingmade at a factory in China suspected of using North Korean forced labour. In another episode, Marketplacealso revealed that major Canadian grocery retailers were selling tomato productsharvested and manufactured by Uyghurs and other ethnic minorities under oppressive working conditions in China.

Labour Minister Seamus O'Regan's mandate letter askshim to introducelegislation to remove forced labour from Canadian supply chains and ensure Canadian companies do not contribute to human rights abuses abroad.