By Fabio Teixeira, Luciana Magalhaes and Lisandra Paraguassu
CAMAÇARI, Brazil (Reuters) -The workers who traveled from China to northeast Brazil to build a new factory for electric car maker BYD earned roughly $70 per 10-hour shift, over twice the Chinese hourly minimum wage in many regions. For many, that made signing up an easy decision - but getting out would be much harder.
The Chinese workers hired by BYD contractor Jinjiang in Brazil had to hand over their passports to their new employer, let most of their wages be sent directly to China, and fork over an almost $900 deposit that they could only get back after six months' work, according to a labor contract seen by Reuters.
The three-page document, signed by one of 163 workers who labor inspectors said were freed from "slavery-like conditions" last month, includes clauses that violate labor laws in both Brazil and China, according to Brazilian investigators and three Chinese labor law experts.
Other previously unreported clauses gave the firm the power to unilaterally extend the labor contract for six months and issue 200 yuan fines for conduct such as swearing, quarreling or walking around shirtless at the site or in their living quarters.
Many of the clauses "are textbook 'red flags' of forced labor," said Aaron Halegua, a lawyer and fellow at New York University Law School, who won compensation for Chinese workers who sued their employers for forced labor in the Northern Mariana Islands, a U.S. territory.
He added that withholding workers’ passports or requiring any form of performance bond or security payment would not be permitted under Chinese laws and regulations.
Jinjiang, which works on BYD factory construction across China in cities such as Changzhou, Yangzhou and Hefei, has disputed the allegations, saying the findings by Brazilian labor inspectors are inconsistent with the facts and the result of confused translations.
"The claim that Jinjiang's employees were 'enslaved' and 'rescued' is totally off base," said Jinjiang in a statement last month.
Alexandre Baldy, senior vice president for BYD Brasil, told Reuters the carmaker had no knowledge of any violations until the first reports by Brazilian media in late November, when BYD contacted Jinjiang about the allegations.
Baldy and BYD Brasil President Tyler Li then met on Dec. 2 with Brazilian President Luiz Inacio Lula da Silva. They told Lula at the time that BYD was addressing the issue, according to two people familiar with the conversation.
Lula's office did not immediately respond to a request for comment.
Two weeks later, a raid by labor inspectors found the laborers living crammed in lodgings without mattresses. Thirty-one workers were crammed in a single house with only one bathroom and food piled up on the ground alongside personal belongings, in what inspectors said were "degrading conditions."
Baldy denied discussing the matter with Lula in their meeting and said the company had no knowledge of the Jinjiang labor contract. BYD is taking action to make sure "this situation never happens again," he told Reuters. After the raid, BYD ended its contract with Jinjiang.
Inspectors have provided no evidence that BYD knew of the violations, but BYD is "directly responsible," said Matheus Viana, acting chief of Brazil's Division of Inspection for the Eradication of Slave Labor, because the carmaker is responsible for the actions of a third-party contractor on its site.
REPLACING FORD
The previously unreported contract offers fresh details of how a plant held up as a beacon of closer Brazil-China relations became the site of scandal for BYD in its biggest market outside of China.
BYD agreed in late 2023 to take over and invest heavily in electric vehicle production in an industrial park in Camaçari, near the capital of Bahia state, the site of a Ford Motor Co plant for two decades.
Ford abandoned the plant in 2021, firing some 5,000 workers as it ended manufacturing in the country.
For President Lula, former head of a metalworkers union in Sao Paulo, the BYD deal promised to deliver 21st-century manufacturing jobs in a stronghold of his Workers Party.
News of the big investment stirred hopes the Chinese firm would bring back twice as many jobs as Ford had eliminated, in a state where almost 10% of people are unemployed.
But when BYD brought in the Chinese contractor to build the factory, Antonio Ubirajara Santos Souza, coordinator of the local union of construction workers (Sindticcc), said it was a sign the company "didn't play fair."
In a statement to Reuters, BYD said the firm is committed to generating local jobs and that when the factory complex is fully operational, it will have 20,000 workers, including Brazilians.
During the December raid, inspectors found copies of 10 contracts with similar clauses to those seen by Reuters, they said. Some workers told inspectors they did not have contracts, and others said they only signed theirs after months in Brazil.
BYD and Jinjiang will be charged with hampering the probe because they did not provide inspectors with the address for the workers' lodgings when requested, said Daniel Santana, a labor inspector investigating the case, exposing the two companies to a potential fine.
PROBE STIRS LOCAL RESIDENTS
Hundreds of Chinese workers are still working at the construction site alongside Brazilians, union leaders told Reuters. Union officials say the Brazilian employees complained this month of irregularities at the site, including a lack of drinking water.
BYD shared pictures with Reuters of new lodgings and cafeterias it made available to employees. Still, the local construction workers union, Sindticcc, has decided to sue both BYD and Jinjiang over past violations.
Local politicians also raised concerns about other projects in Bahia slated for construction by Chinese firms, such as a bridge in the state capital Salvador budgeted at 7.6 billion reais ($1.28 billion), which some local residents fear could be the latest in a series of projects leaning on imported labor.
"We can never bring development to our state at the cost of slave labor," said Alan Sanches, a state congressman.
Bahia Governor Jeronimo Rodrigues told Reuters BYD is still expected to create 10,000 local jobs and that the state cannot "lose that opportunity." Still, he said, BYD has to provide work in decent conditions.
Julio Bonfim, head of the metalworkers union of Camaçari, said he already warned BYD officials that his office will not accept Brazilians losing out on job opportunities to workers brought from China.
If that happens, he said, "the factory will face its first strike under BYD before production even begins."
(Reporting by Fabio Teixeira in Camaçari, Luciana Magalhaes in Sao Paulo and Lisandra Paraguassu in Brasilia; Additional reporting by Ricardo Brito in Brasilia and James Pomfret in Hong Kong; Editing by Manuela Andreoni, Christian Plumb and Aurora Ellis)
