A watchdog created by the federal government to probe corporate wrongdoing abroad says Vancouver-based Dynasty Gold Corp DYG-X has contributed to the use of forced labour at a mine in Xinjiang, China, and is asking Ottawa to cut off future trade support for the company.
Its investigative findings were released Tuesday in the first final report issued by the Canada Ombudsperson for Responsible Enterprise (CORE) since it opened its doors to receive complaints in March, 2021.
Xinjiang has been a particular concern for rights activists, Western governments and academics who say China since 2017 has imposed an unprecedented system of forced labour on the millions of Uyghurs and other Turkic Muslims who live in the region. Michelle Bachelet, who was United Nations high commissioner for human rights until August, 2022, visited Xinjiang that year. Her office’s report on the trip said China’s treatment of Uyghur Muslims in the region may amount to crimes against humanity.
The CORE report arrives as Ottawa is setting up a mandatory reporting system for companies that will require all Canadian companies and government bodies starting in 2024 to report publicly on forced labour in their supply chain. This follows from Bill S-211, sponsored by Liberal MP John McKay in the Commons, which passed in 2023 and entered into force Jan. 1.
The complaint against Dynasty Gold was filed by a coalition of human rights groups in 2022 including the Uyghur Rights Advocacy Project and the Raoul Wallenberg Centre for Human Rights, founded by former Liberal justice minister Irwin Cotler.
They alleged the Vancouver company benefited from the use of Uyghur forced labour at the Hatu mine in China in which, CORE says, Dynasty Gold holds a majority interest.
CORE noted that Dynasty reasserted its position as a majority shareholder of a joint venture with Chinese state-owned Xinjiang Non-Ferrous Metal (XFN) as recently as an April, 2022 press release.
The ombudperson’s conclusion is based on evidence from the international community documenting the pervasive use of forced labour throughout the Xinjiang Uyghur Autonomous Region and on an admission by Dynasty’s joint venture partners that they participated in forced labour schemes by the People’s Republic of China (PRC) and received labourers at the Hatu mine specifically, the watchdog said.
“There is clear evidence that Uyghur forced labour was used at the Hatu gold mine,” CORE ombudsperson Sheri Meyerhoffer said in a statement. “Like all Canadian companies operating outside Canada, Dynasty has a responsibility to respect human rights. In this case, Dynasty failed to operate responsibly.”
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Dynasty chief executive officer Ivy Chong on Tuesday refused to accept the CORE report findings, calling it “full of errors and inaccuracies,” saying the joint venture lost its exploration licence in 2008 and business licence shortly after. “Without a business licence, no company can operate in China,” she said.
She said Dynasty was forced to resort to legal action in China.
“There hasn’t been any relationship between Dynasty and the state-owned Xinjiang companies since 2008. All that was left for Dynasty to do was to fight for compensation in the Chinese court for its investments.” She said Dynasty wrote off all its investments in Xinjiang in its 2010 annual financial statements.
“Dynasty has never conducted mining in the Hatu mine. It was an exploration operation.”
Ms. Chong accused the federal watchdog of ignoring Dynasty Gold’s version of the story. “Despite our repeated explanation of the situation and the timeline of the events, CORE still decided to publish this report that contains numerous untrue and unfounded statements without providing any evidence of support and substantiation.”
CORE, however, said Dynasty demonstrated a “lack of participation” in the complaint process, noting it didn’t first engage with the office until eight months after the federal watchdog began contacting it. Dynasty “failed to provide any of the documents or information requested,” CORE said, and the company did not respond to the office’s request for comment when it sent them the draft final report.
“Dynasty’s disregard for the complaint process and casual response to the complaint itself is disconcerting and falls far short of the CORE’s standard of good faith participation,” the report said.
The initial complaint against Dynasty noted that Hatu is less than an hour’s drive from Karamay, where the Australian Strategic Policy Institute has identified six detention centres for Uyghurs and other Turkic minorities, two of which have been used as “re-education” centres for political indoctrination and skills training.
CORE said there is evidence to suggest both XFN and its wholly owned subsidiary Western Region Gold Co. Ltd (WRG) “have been involved in the People’s Republic of China’s forced labour schemes” and it noted Dynasty’s “own communications emphasize that its operations relied on the use of Uyghur workers, amongst other ethnicities.”
The ombudsperson’s office said Dynasty’s status as a majority shareholder was sufficient for CORE to find that the company has “operations abroad” as its mandate requires. It said it uncovered no evidence “that Dynasty took steps to assess its potential involvement in Uyghur forced labour abuse” at any point.
“It is likely that the only realistic option for Dynasty to prevent or mitigate the use of Uyghur forced labour in [Xinjiang], given that the abuse is state-sanctioned, would be to consider ending the relationship,” the ombudsperson’s office said. “It does not appear that Dynasty has considered a responsible exit at any point throughout its operations” in the region, it said.
CORE urged Dynasty to take remedial steps including: making a significant financial donation to one or more not-for-profit organizations working to combat Uyghur forced labour, assessing its leverage to prevent or mitigate the use of forced labour at the Hatu mine, and in light of the findings, determine whether to exit responsibly from its business relationships in Xinjang.
CORE urged the Department of Global Affairs to withdraw any trade advocacy support currently provided to Dynasty if it was receiving such support; and refuse to provide any future trade advocacy support “until such time as Dynasty has fulfilled the ombud’s recommendations.”
Mehmet Tohti, executive director at the Uyghur Rights Advocacy Project and Sarah Teich, co-founder and CEO of the Human Rights Action Group, applauded the CORE report and urged Dynasty to comply with it.
Global Affairs spokesman Jean-Pierre J. Godbout said Ottawa welcomed CORE’s findings and recommendations “and will give them due consideration moving forward.” He did not say whether International Trade Minister Mary Ng would cut off federal trade support as recommended.
Steven Chase