Shell makes deal with Cosan in Brazil despite slave labour claims

3 February 2010

The oil giant Royal Dutch Shell has announced a $12 billion (£7.5 billion) deal with Cosan, one of the world’s largest ethanol and sugar producers, despite claims that the Brazilian company used slave labour.

On 31 December Cosan was included in the Brazilian Labour Ministry’s slave labour ‘dirty list’ after an inspection in June 2007 by the country’s anti-slavery taskforce, the Special Mobile Inspection Group, rescued 42 people from Cosan’s Junqueira refinery. The refinery in São Paulo State produces 24,000 bags of sugar and a million litres of ethanol a day.

The enslaved workers had been trafficked from north east Brazil, the poorest region of the country, with false promises of a good job and decent wages. Inspectors found workers were left unpaid after deductions were taken from their wages for rent in unhygienic lodgings and for basic necessities, including protective hats. The workers, which included one minor, did not have proper contracts and were left without clean drinking worker.

The slave labour ‘dirty list’ is updated every six months and includes companies where slavery has been uncovered by the inspectors. Companies are kept on the list for two years, during which time they are unable to receive public funds and even some private banks will refuse them credit. Those on the list automatically have their business dealings suspended by companies that have signed Brazil’s non-slavery commitment.

The ‘dirty list’ currently includes 161 employers. A further 11 employers joined Cosan on the latest version of the list, including soy growers, cattle farmers and coal producers. Ten companies left the list after the mandatory two years and after paying all the necessary fines.

Cosan, has an annual turnover of $7.6 billion in 2008 (£4.8 billion) and employs up to 43,000 people during the sugar harvest season. On 8 January Cosan was able to get a temporary injunction to remove it from the ‘dirty list’. The world’s largest retailer, Walmart Brazil, which is a signatory of the non-slavery commitment, resumed business with Cosan after initially suspending sugar purchases following the company’s inclusion on the list.

While the Ministry of Labour is already challenging the injunction with help of federal government lawyers, some senior politicians have rushed to publicly defend Cosan. Brazil’s Agriculture Minister Reinhold Stephanes went as far as to describe the company’s inclusion in the dirty list as an ‘exaggeration’ and a ‘mistake’.

Brazil is the world’s largest source of ethanol, producing around 21.3 billion litres a year. More than 90 per cent of cars in Brazil are able to run on sugar cane ethanol, which produces 55 per cent of the equivalent energy of oil. The Shell deal, which is expected to double Cosan’s ethanol production to four billion litres a year by 2014, would increase the availability of ethanol at petrol stations across the world.

Despite the conditions uncovered at the refinery, the judge who removed Cosan from the ‘dirty list’ said the workers situation did not amount to slavery, also that responsibility for the workers lies with a subcontractor labour provider who directly hired the cane cutters.

However, this passing of blame has been attacked by anti-slavery activists. Joanna Ewart-James, Anti-Slavery International’s Supply Chain Co-ordinator said: “The fact that workers in this case were not directly employed by Cosan does not absolve the company of the responsibility to ensure that workers producing their goods are employed in decent conditions.”

The Labour Prosecutor involved in the rescue of the workers has argued against the legality of the outsourcing to the subcontractor and also said a compensation offer by Cosan to the workers after their rescue was the equivalent of moral damages and is tantamount to proof of responsibility.

Historians estimate that over a period of 300 years around three million slaves were imported to Brazil from Africa. An estimated five per cent of the work force were slaves when Brazil became the last country in the Americas to abolish slavery in 1888.

Contemporary slavery in Brazil’s plantations, ranches and farms can be traced back to the military rule of the 1970s, which aggressively backed investment by companies in the rainforest. The Brazilian Federal Government has rescued more than 36,000 workers since the creation of the Special Mobile Inspection Group in 1995.

While cattle ranches remain the most frequent location of slavery, the majority of people in slavery in Brazil work on sugar cane plantations. Between 2007 and 2009, 44 sugar plantations have been responsible for half the people rescued from slavery in Brazil. In 2009 alone, 1,911 workers were rescued from sugar cane plantations.

Brother Xavier Plassat from Brazilian anti-slavery organisation the Pastoral Land Commission (CPT), said: “The dramatic expansion of agribusiness crops in southern and central Brazil lies at the heart of the country’s slavery problem. The existence of slavery totally undermines the idea that sugar cane ethanol is a ‘clean’ biofuel.”

Half a million people are estimated to work as cane cutters in Brazil, the majority of which are forced by grinding poverty to migrate thousands of miles each year to find a job.

The route to slavery usually involves a trafficker, called a ‘gato’ or cat, who entices workers from the very poor areas of the Brazilian north east to work in faraway towns and farms in return from an advance on their wages. Only when the worker arrives do they realise that they have an uncontrollable debt and will be forced to work, often through threats or force, for the length of the harvest, which can be up to eight months.

In some sugar plantations people are made to cut 17 tonnes of cane a day compared to six tonnes a day only 10 years ago. Francisco Alves, a lecturer at the Federal University of Sao Carlos estimates that to cut so much cane, the workers will need to swing their machete 133,332 times a day, whilst all the time breathing poisonous soot from burning sugar cane.

Workers are known to have died in the sugar fields from exhaustion and the life expectancy for a cane cutter today is only ten years, two years lower than that achieved by African slaves during the colonial period.