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KTNCW et all. vs. Daewoo

Case overview

Date filed 3 December 2014
Current status Rejected
Issue Daewoo’s use of cotton harvested with forced & child labour
Summary of the case Uzbekistan is one of the few countries around the world that through the implementation of state policy subjects its citizens to forced labour. The government forcibly mobilises farmers to grow cotton and forces more than a million men, women and children to harvest it. Since its first investment in Uzbekistan in the 1990s, Daewoo has expanded to three factories and is currently the countrys largest cotton processor, buying 5% of all Uzbekistans cotton. In return, the Uzbek government provides Daewoo with discounted cotton prices, tax incentives and preferential loans.
The complainants have been in direct contact with Daewoo since 2012. The company repeatedly admitted to having purchased cotton produced with forced and child labour. Nevertheless, the complaint alleges that Daewoo refuses to cease purchasing forced-labour cotton or to conduct independent human rights monitoring of its supply chain in Uzbekistan. It also alleges that Daewoo failed to conduct comprehensive human rights due diligence in its supply chain and contributes to the ongoing human rights violations associated with the cotton harvest in Uzbekistan.

The complainants also ask Daewoos parent company POSCO to take its responsibility to avoid contributing to human rights violations in its subsidiarys operations and supply chains. Complaints have also been filed against Norwegian pension funds NPS and NBIM, requesting that as institutional investors of Daewoo International, they use their leverage to ensure that they mitigate the adverse human rights impacts to which they are directly linked to through their financial relationship with Daewoo.
Developments/Outcome After an extension to carry out its initial assessment, the Korean NCP rejected the complaints against Daewoo, POSCO and NPS in July 2015. The NCP recognised the internal guidelines for ethical business conduct that the companies have in place and could not establish that the they have breached the due diligence provisions of the OECD Guidelines or contributed to child labor and forced labour. The NCP further takes into consideration that the companies are not in a position to have leverage over the Uzbek government.

Given its relatively recent conclusion of a complaint against NBIM on the same issues and the ongoing clarification process at OECD level on the application of the OECD Guidelines to the financial sector, the Norwegian NCP decided to close the case without further consideration in July 2015. The NCP did not reject the complaint, but concluded that a new examination of same questions of principles concerning the financial sector’s compliance with the Guidelines will not contribute to the purpose of the OECD Guidelines. It its statement the NCP did make reference to its previous decision and recommendations to NBIM formulated at the conclusion of a complaint filed by ForUM and concluded by the NCP in May 2013.
Relevant OECD Guidelines
Case keywords Child labour, Forced labour

NCP Information

NCP name National Contact Point Korea
NCP address Trade Tower 135-729 Seoul, Korea, Republic of
NCP website http://www.mocie.go.kr/
Other NCPs involved

Complainants

NGO

Company Information

Company responsible Daewoo International
Company address Namdaemun, Yonsei Severance Building, 84-11
100-753 Seoul
Korea, Republic of
Company website http://www.daewoo.com/english/index.jsp
Company in violation
Country of operations Uzbekistan
Other companies involved

Timeline of developments

Date Actor Action Description Document
7 July 2015 National Contact Point Korea reject Korean NCP rejects complaints against Korean companies download pdf (122Kb)  
2 July 2015 National Contact Point Norway reject Norwegian NCP rejects complaint download pdf (846Kb)  
3 December 2014 Korean Trans National Corporations Watch file The complainants submitted the case and are awaiting for the NCPs initital assessment. download pdf (370Kb)  
3 December 2014 Korean Trans National Corporations Watch letter Press release accompanying the complaint. download pdf (252Kb)  

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