Byline: Eric Wilson

NEW YORK — For independent monitoring to work in Latin America, it cannot be conducted by the companies involved, but must be truly objective.
That was one of the key conclusions at a labor discussion last week that put the first-ever independent monitoring of a factory in El Salvador under a microscope to see whether it could be applied to other Latin American countries.
The conclusion by leaders of labor, human rights and civic groups was that it could — with reservations.
Pharis Harvey, director of the International Labor Rights Fund, said monitoring could be done commercially by independent auditors only if a strict system of checks and balances were in place.
The group met Friday afternoon at the Queens College Worker Education Extension Center here in the second half of a conference on independent monitoring.
Labor and human rights officials from Honduras, Guatemala and Haiti shared experiences within the maquila, or free-trade-zone factories, of their respective countries. They expressed interest in similar independent monitoring programs to one initiated at Mandarin, an El Salvador contractor for Gap, in March 1996.
That case arose from protests by the National Labor Committee and UNITE against Gap for using Mandarin, where labor abuses were uncovered. Gap agreed to independent monitoring by human rights, religious and civic groups organized by NLC, the first case of such a program in Latin America.
Using the case as a springboard, the international officials discussed possible applications of monitoring.
“The problem we are trying to deal with has to do with an economic model that demands high productivity at the lowest economical cost to proclaim the scheme of total quality,” said Dr. Ramon Custodio, president of the Committee for the Defense of Human Rights in Honduras.
Women are earning an average monthly salary of $129 in El Salvador, while they earn a monthly salary of $83 in Honduras, Custodio said. In Honduras, women are rarely allowed to see a doctor when they are sick and they are routinely dismissed when they become pregnant, an example of which there is only one case in El Salvador, Custodio said.
Conditions in Honduras, he said, have been weakened by the need to compete with El Salvador and other Latin American countries to retain manufacturing contracts.
“It is a very important fact that we are competing with El Salvador in order to determine which one of us is going to have more maquiladoras,” Custodio said.
Homero Fuentes, coordinator of the union program for the Fundacion Friedrich Ebert in Guatemala, said, “I want to recognize that our countries have extremely weak formal democracies, therefore the institutions that look out for a state of law and rights are very fragile. We have a civil society that feels a great absence of organizations that look out for their interests.”
Groups that have emerged to defend human rights in Guatemala have been systematically violated, Fuentes charged. However, codes of conducts have been established by the North American firms contracting labor and the Guatemalan association of maquila producers.
“Both make use of higher accounting firms that are recognized nationally and internationally, but they don’t form the necessary equilibrium,” Fuentes said. “We cannot deny their expertise in terms of accounting and administrative analysis within a company, but they lack a fundamental factor, which is work and knowledge of working conditions.”
Independent monitoring could be valuable in Guatemala as a preventative agent, he said, although “that is not constituted as a substitute for the union movement.” While he said the example of independent monitoring is an effective one, the most desirable solution would be the effective application of existing laws within Guatemala, such as complying with social security. He said only 32 percent of maquilas currently comply.
“We find ourselves in a very complex situation because the political level [in Haiti] is very unstable,” said Yannick Etienne, who represented Batay Ouvriye (Worker Struggle), a human and labor rights advocacy and education organization in Haiti. “While we believe that there is an opening in the political process that allows opportunities, we find that the situation is so difficult that it can change at any moment and lead to another form of dictatorship or occupation.”
At the factories there, supervisors have total impunity, she said.
“In addition, they are supported by the Haitian government as well as other international organizations. So it falls solely on the backs of the workers to take stock of the situation and lead their own struggle because they know full well in defending their rights it is a struggle with themselves as well as with the owners,” Etienne said.
To work in Haiti, independent monitoring would have to be “totally independent.”
“The people are frustrated and do not trust any organization,” she said.
The issue of companies hiring independent auditors as independent monitors was highly contentious, although only one auditing company, KPMG Peat Marwick, seeking to act as an independent monitor, was present.
Gap, Walt Disney, Levi Strauss, Phillips-Van Heusen, Liz Claiborne, Wal-Mart, Nike, Businesses for Social Responsibility, Price Waterhouse, KPMG Peat Marwick, National Retailers Federation and American Apparel Manufacturers Association representatives were invited to the conference, but only KPMG and NRF officials attended, although the NRF officials did not address the conference or respond to questions.
Susan Jayson, director of KPMG’s Business Ethics Services, said, “Many of our clients have hundreds, perhaps thousands of company suppliers overseas that they deal with. They often do not have the resources — people and financial — to go out and do the kind of independent monitoring to assure that the factories are in compliance with labor laws and human rights standards.”
Jayson said KPMG’s network of 76,000 employees and global reach could be used as an effective monitoring tool. KPMG is also seeking to “serve as a bridge” between the North American apparel firms and nongovernment organizations (NGOs) within each country, using the NGOs as “resources” to monitor the factories once KPMG has inspected and left the sites.
To date, no apparel firm has agreed to use KPMG as an independent monitor because of the NGO issue, said Ian Spaulding, assistant director of KPMG.
“The companies do not want to talk to the NGOs because they feel as if the NGOs have their own agendas, just as the NGOs feel the companies have their own agendas,” Spaulding said.
KPMG’s proposed business ethics services was met with much apathy, and Mark Anner, a board member for the Center for Labor Research, one of the NGOs that participated in the Mandarin monitoring, said his group would refuse to cooperate with KPMG.
“If we need the help of an auditor, then we can call them up, but my organization in El Salvador would not be willing to participate,” Anner said.
The proposal of independent monitoring as a commercial practice was also blasted by human rights and labor representatives.
“It is impossible to consider any monitoring independent if its accountability is only to a plant,” said Harvey of the International Labor Rights Fund. He noted that in financial accounting, firms like KPMG and Ernst & Young function within a context of legal liability, “but in social accounting and human rights monitoring, there is no such context.”
However, Harvey proposed that labor representatives develop a capacity for commercial firms to be involved with independent monitoring within a system of accountability because the scope of global independent monitoring is greater than the capability of NGOs.
Some members of the audience still appeared skeptical about KPMG’s proposal, with one UNITE research associate asking facetiously, “Would you be able to offer some sort of discount toward labor unions and not-for-profits? Independent monitoring at a good price?”
“Wait a minute. What?” said an overheated Spaulding, who had by this point removed his jacket and tie. “Our prices may be too high for a lot of firms, giving that they’re not willing to step up to the plate to devote the resources necessary to get a more objective audit.”
This incited the audience further, with one panelist shouting, “Reasonable ethics at a reasonable price!”
Mark Anner said the Mandarin model was achieved on a budget of $5,000 in 1996, half of which was paid by Gap and half by the NLC.
“The Gap has informed us they are unable to provide further money,” Anner added, noting that the monitoring budget for 1997 would come from two Canadian organizations, The International Center for Human Rights and Democratic Development and the Canadian Paper Workers Union.

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