The audit that Volkswagen claimed cleared it of allegations of forced labour in Xinjiang failed to meet international standards, according to a review of the leaked report on its findings.
VW said in December that an audit had found “no indications of any use of forced labour” at its plant in the western Chinese region, where human rights groups have documented widespread abuse against the mainly Muslim Uyghur ethnic group.
Löning, the Berlin consultancy founded by former German human rights commissioner Markus Löning, had applied the “internationally renowned” social auditing standard SA8000, VW said in a press release then. This prompted global index provider MSCI to remove a “red flag”, which since 2022 had barred ESG-focused investors from buying VW shares because of the Xinjiang allegations.
But the audit report, seen by the Financial Times, shows that the Chinese firm involved in the work with Löning, Guangdong Liangma Law, did not adhere to critical aspects of the SA8000 auditing standard.
“The conclusion of [VW’s] press release is not substantiated by the audit,” said Judy Gearhart, professor with the Accountability Research Center at American University’s School of International Service, who helped develop the SA8000 rules.
The report highlights the difficulties in carrying out credible audits in Xinjiang, and more broadly throughout China, for western companies with large operations in the country. VW is China’s best-selling foreign auto group and the country of 1.4bn people has been generating at least half of the German group’s profits.
Western governments and international human rights groups say that hundreds of thousands of Uyghurs and other Muslims were detained in the region from 2017 to 2019 and that many have also been subjected to re-education and forced labour. Beijing has denied allegations of human rights abuses.
Gearhart said that VW’s audit “departs” from the SA8000 standard “in several important ways”, chief among them the way interviews with staff were conducted.
Notably, the interviews, carried out at the plant in the regional capital Urumqi, were live streamed to the law firm’s headquarters in Shenzhen.
The live broadcast placed workers in a situation that was “intimidating [and] did not guarantee confidentiality”, Gearhart said. “The interviews have no value [and] cannot be used as confirmation of the situation in the factory.”
VW said that the SA8000 standard had only been used by the auditors as a “basis” but that “full examination of all points mentioned in the standard were [not] necessary”.
The carmaker said it “always complies with legal requirements in its communications”, adding that “investors or the public have never been deceived”.
Rushan Abbas, founder of the NGO Campaign for Uyghurs, who first received the leaked audit report and shared it with the FT, Der Spiegel and ZDF, said that VW’s “deceit and obfuscation are an insult to . . . millions of victims”.
VW has for years faced questions over potential forced labour at its Xinjiang plant, which is run by a joint venture with state-owned SAIC.
The plant, which was built in 2013, wound down production after the pandemic and its 197 remaining employees — just under a quarter of whom are Uyghur — now carry out quality checks on cars shipped from other Chinese plants.
VW managers briefed on the matter have previously said that the company is reluctant to leave the region before its existing agreement with SAIC expires in 2029, as this would hurt its relationship with the Chinese state-backed partner.
The report by Liangma, dated November 20, two weeks before VW communicated on its findings, shows that only managers were asked questions related to forced labour.
One question was: “Have you ever witnessed or heard of instances of forced or compulsory labour practices within the factory or its supply chain?”
Questions to floor workers allowed only yes, no or other pre-determined answers and did not directly address forced labour. “Discrimination witnessed/experienced: a) Yes b) No”, one read.
“All interviewees were very relaxed and with smiling faces,” the audit report further noted.
Under China’s legal system, factory workers risk committing an administrative violation or criminal offence, including breaching national security laws, if they publicly comment about forced labour practices, “even if the statements are true”, according to a Beijing-based legal expert, who required anonymity for safety reasons.
China’s foreign ministry did not immediately comment.
VW’s summary of the audit last December created a staff rebellion at Löning, which days after its publication admitted: “The human rights situation in China and Xinjiang and the challenges in collecting meaningful data for audits are well known and are also present in this project.”
In a statement on LinkedIn, the German consultancy added that “no other team member” apart from the founder and the employee who had been on the ground in China “supported or backed this project”. Several of the firm’s employees have since left, according to their LinkedIn profiles.
According to the leaked report, the audit was conducted by two senior lawyers, Simon Choi and Wen Xu, and the Chinese law firm’s chief compliance officer Clive Greenwood. The report makes no mention of Löning or Christian Ewert, the Löning employee who VW said accompanied the Liangma lawyers.
VW declined to comment on the discrepancy, citing “contractual confidentiality obligations”.
A spokesperson for VW’s works council said that in light of the fresh details about the audit, it expected the company to “provide a complete clarification of the allegations” as well as “transparency regarding the responsibilities of top management and the board of directors”.
“The key question is: how reliable are the conclusions of the audit in light of the latest findings?” the spokesperson said.
Greenwood, a British citizen who has spent decades in China, until recently stated in one LinkedIn profile that he joined the Chinese law firm weeks before the audit took place. His profile was edited to remove the reference shortly after the FT sought to contact him for comment.
According to a separate, older, LinkedIn profile, he spent almost a decade running an expat bar in the Chinese city of Suzhou called The Drunken Chef until 2013, although an X account associated with him and the bar was posting updates as recently as 2016. Companies House filings and social media activity shows that he was in Birmingham as recently as 2019, where he ran the city’s oldest pub, The Lad in the Lane.
Greenwood returned to China in January 2020, according to posts on LinkedIn, and founded a firm carrying out quality control audits for small and medium-sized European businesses. He did not reply to a request for comment.
About a year before he helped VW audit its Xinjiang plant, Greenwood published a post on LinkedIn that featured a picture of a pile of peanuts with the question: “What’s the value of a SA8000 audit in China” next to it.
VW said that “to the best of our knowledge, all persons involved in the audit had the appropriate qualifications and experience required for their respective activities”, and stressed that it had contracted Löning to carry out the audit and had “not commissioned any other companies”.
Markus Löning declined to comment. Ewert did not reply to a request for comment, nor did Liangma and the two lawyers involved in the audit.
In its December statement, VW claimed that the Chinese law firm that had carried out the audit had “extensive experience in social audits”.
However neither Liangma or Löning are accredited to carry out SA8000 audits, according to a list compiled by Social Accountability International, the standard-setting body.
Adrian Zenz, a researcher whose analysis of Chinese government records was instrumental to exposing China’s internment system in Xinjiang, said “the most central claims” made by VW about the audit were “misleading or false”.
He also noted that the audit referred to staff activities to promote that “all ethnic groups were in harmony”, which he said implied that the VW plant was “aiding the [Chinese] state in enforcing its coercive ethnic policies”.
VW said that the Liangma lawyers who carried out the audit had “many years of practical experience with audits according to SA8000 and Chinese labour law”.
Contacted for comment, MSCI said its decision to remove Volkswagen’s red flag had reflected the “public findings of an audit commissioned by Volkswagen and performed by Löning Human Rights & Responsible Business GmbH, which found no ‘indication or evidence of forced labour among the employees’, while acknowledging “challenges in collecting data for audits”.
It added that it would “continue to monitor any future public disclosures related to this case.”
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