Bureau Veritas Auditors Bribed, Fail to Report Illegal Conditions, Report Shows

Dec 09, 2009, 10:58 ET from China Labor Watch

NEW YORK, Dec. 9 /PRNewswire-USNewswire/ -- Factory audits are key to corporate awareness of violations in supplier factories. Audit corruption undermines this process, conceals violations, and makes even minimum corporate standards difficult to enforce. From 2007-2009, China Labor Watch investigated corruption in 80 audits in Guangdong Province, China. CLW's latest report is about endemic corruption in the audit force of Paris-based inspection and certification giant, Bureau Veritas, which conducts audits for a number of multinational corporations. "Corruption in BV's auditing force seriously damages worker rights in China," said CLW Executive Director, Li Qiang.

CLW's investigation identified BV as the major audit firm with the highest rate of corruption; of 19 BV audits investigated by CLW, 10 or 53% yielded significant evidence of corruption. CLW describes different forms of corruption that undermine the factory audit process, including extortion, bribery, improper conduct during audits and exchange of other gifts between auditors and factory management. Corrupt BV auditors prevent corporations from identifying instances where their codes of conduct as well as Chinese laws are violated, which ultimately damages worker rights.

Chinese media focused on BV's auditor corruption during newspaper coverage in August of a factory which refused to give bribes to BV, then failed several audits and went bankrupt. The factory was approached by a fraudulent "consulting company" which stated that for a large fee, it could pass its BV audits. BV explains that the consulting company was the operation of a former BV employee who was terminated for integrity issues. CLW's report explains that many factories offer bribes through fraudulent "consultant" companies in order to avoid being implicated in the transaction.

In total, the report outlines seven specific cases of BV auditor corruption from 2007-2009. Specific forms of corruption range from accepting transportation or lavish meals, to taking bribes of up to 15,000 RMB($2,206 USD)/auditor. The report also includes information on conditions of factories that pass BV audits by means corruption - including discriminatory hiring, sub-minimum wages and failure to pay for overtime work.

To read the report, visit www.chinalaborwatch.org.

SOURCE China Labor Watch