Volkswagen under fire after audit finds no evidence of Uyghur forced labor

Volkswagen said a self-commissioned audit turned up no evidence that its joint venture plant in Xinjiang had used Uyghur forced labor, but experts on the region cast doubt on the results, saying official documents show Uyghur detainees from re-education camps were funneled to the factory.

The audit was carried out by German due diligence firm Loening Human Rights & Responsible Business GmbH came in response to a demand by investors after activists accused the German carmaker of using forced labor at its joint venture with China’s SAIC Motors in Urumqi, the regional capital.

In presenting the findings Wednesday, Loening’s Managing Director Markus Loening acknowledged that the audit, based on on-site interviews and inspection of employee contracts and salary payments for 197 employees, may have been hampered by what he described as “well-known … challenges in collecting data” due to “legislative changes” in the region.

Chinese authorities in Xinjiang have clamped down on the flow of information in and out of the region amid concerns from the international community over the situation Uyghurs face there.

Reuters news agency cited analysts at Citi who said the audit’s conclusions could potentially bolster Volkswagen’s stock, which took a hit amid the allegations – in part because it would remove restrictions that prohibit investors in the European Union from buying into a company known to profit from forced labor.

But Adrian Zenz, director of China Studies at the U.S.-based Victims of Communism Memorial Foundation, dismissed Loening’s findings, saying in a post to the social media platform X that he had found evidence showing “Uyghurs were sent from re-education camps directly to vocational institutions that organized job fairs with Volkswagen & advertise degrees with Volkswagen as a typical work destination.”

Xinjiang Police Files

Zenz, who has spent years documenting China's human rights abuses against Uyghurs, said the evidence was discovered in the Xinjiang Police Files, a cache of millions of confidential documents hacked from Xinjiang police computers.

The files date from 2017 to 2018, during the height of one of China’s mass detention campaigns, during which hundreds of thousands of Uyghurs and other Turkic minorities were sent to the camps.

He cited the example of Adiljan Hashim, who police records show was detained in October 2017, then placed into the Xinjiang Light Industry Technical College in January 2018.

“This ‘release’ was highly controlled and based on pre-agreed conditions,” Zenz said, adding that Xinjiang Light Industry Technical College offers majors in fields such as automobile manufacturing and lists examples of cooperation with companies including Volkswagen Xinjiang on its website, and advertises Volkswagen as a graduate employer.

Zenz cited additional police files which he said showed the detention of tertiary students at other institutions such as the Xinjiang Vocational University, which also offers automobile-related degrees.

“A number of detainees were released into state-directed vocational skills education, which they are not at liberty to choose,” he said. “The ramification is that re-educated and coerced Uyghurs can likely end up working for larger companies such as FAW-Volkswagen in Xinjiang.”

Zenz said that such risks “cannot be ascertained through audits,” as Uyghurs are not free to speak about re-education experiences or other repressive state measures in their lives.

‘Flawed process’

Another expert, Hanno Shadler, the senior Legal Advisor at the Society for Threatened People's (Germany), called the audit a “flawed process.”

“I don't know how a really independent audit is possible when the company SAIC Volkswagen – the joint venture – has ample time to prepare for a one-day visit when they're with auditors,” Shadler said.

“They can prepare the workers. They can intimidate the workers,” he continued. “The employees cannot speak freely because millions of workers have been in concentration camps or hundreds of thousands have been sentenced to long prison sentences.

“Many people have been forced to perform forced labor in previous years. So in this context, I think it's basically impossible to go there and have an independent audit.”

Shadler also pointed out that even a famous figure like Michelle Bachelet, the former U.N. high commissioner for human rights, was barred from speaking freely to Uyghurs when she visited Xinjiang as part of her agency’s investigation into human rights abuses in the region.

“She couldn’t choose the people with whom she wanted to speak,” he said.

The damning 2022 U.N. report Bachelet’s agency produced concluded that China had committed serious rights violations, and that the detention of Uyghurs and other Turkic minorities in Xinjiang may constitute crimes against humanity.

‘Divest and disengage’

Rushan Abbas, executive director of the Washington-based Campaign for Uyghurs said that “Time is running out for these companies if they do not want China’s crimes against humanity to become theirs: They must divest and disengage now.”

Abbas said that given the inability of international missions and audits to ascertain the true conditions of Uyghur workers due to China’s repressive measures in Xinjiang, “immediate withdrawal and disengagement from the region is the only possible, ethical solution.”

However, Nicolai Laude, the head of Volkswagen’s Sustainability & Integrity Communications department, said that Zenz’s claims are “simply not right” and had not been proven without a doubt.

“What we did is we asked and tried to figure out if, for instance, the allegation that we are working with those education companies [was true] or that we are cooperating with them or not,” he said in an interview with RFA on Wednesday.

“There is no cooperation with those education institutes and we did not hire any new workforce in the last four or five years,” he said. “So, for both reasons … it's simply not right, what Mr. Zenz's conclusions might show.”

Laude acknowledged that he had not read the official police documents Zenz referred to in his findings and could not comment on them specifically. But he said that Volkswagen frequently meets with NGOs and human rights groups and is “happy to receive valid information so that we can use this kind of information to examine if … allegations are true or false.”

Laude referred further questions about Loening’s findings to the firm itself, which Volkswagen has said carried out its audit with two Chinese lawyers from a firm in Shenzhen, without naming them.

Earlier allegations

According to Reuters, Volkswagen reduced staff at the Urumqi plant after the pandemic from a peak of 650 to 197, of which just under a quarter are Uyghur, and has denied reports that it kept the facility open on Beijing’s orders in order to continue producing in China.

Volkswagen's China chief Ralf Brandstaetter said he saw no signs of forced labor when he toured the site in February, Reuters said, but his comments drew criticism from campaigners and investors who said determining labor conditions in the region was impossible.

In May, activists staged protests inside and outside Volkswagen’s annual shareholder meeting over the carmaker’s alleged use of Uyghur forced labor in Xinjiang.

Outside the hall, activists wore a big-headed mask of Xi and a flat paper mask of Volkswagen CEO Oliver Blume, who stood arm-in-arm. The Xi figure held a metal ring attached to a chain leading to two handcuffed people representing Uyghur workers in blue laborer uniforms.

Inside the exhibit hall where shareholders gathered, other protesters – including one woman who was topless and had “dirty money” painted on her back – shouted at executives and waved a banner that said, “End Uyghur Forced Labor,” according to Reuters.

After the disruption, security personnel escorted the activists out of the auditorium.

Translated by RFA Uyghur. Edited by Joshua Lipes and Malcolm Foster.