Despite Vows For Safety, Walmart Seen as Obstacle to Change

Abir Abdullah/European Pressphoto AgencySeveral of Walmart's suppliers had used the factory in Bangladesh where 112 workers died last month.  More Photos »

When Walmart’s chief executive, Michael Duke, appeared at a Council on Foreign Relations meeting in New York this month, a raucous crowd of protesters awaited him. Walmart was confronting reports of bribery in Mexico, a wave of labor demonstrations in the United States and, perhaps most critically, questions about a grisly fire that had killed 112 workers at a Bangladeshi garment factory used by several Walmart suppliers.

The second of two articles examining failures to protect garment workers in poor countries who make much of the world’s clothing.

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Michael Duke, chief executive of Walmart, has said that it will not buy from unsafe factories, but several of its suppliers had used the one in Bangladesh where 112 workers died last month. More Photos »

“We will not buy from an unsafe factory,” Mr. Duke told the audience. “If a factory is not going to operate with high standards, then we would not purchase from that factory.”

But Mr. Duke’s reassurances that Walmart enforces high standards in the global clothing industry appear to be contradicted by inspection reports it requested and some of Walmart’s own internal communications:

¶ Just two weeks before Mr. Duke’s vow, a top Walmart executive acknowledged in an e-mail to a group of retailers that the industry’s safety monitoring system was seriously flawed. “Fire and electrical safety aspects are not currently adequately covered in ethical sourcing audits,” Rajan Kamalanathan, the executive, wrote to other board members of the Global Social Compliance Program, a business-led group focused on improving the supply chain.

¶ Three inspection reports from 2011 and 2012 at the Tazreen Fashions factory where the fire occurred revealed serious repeated violations, including a lack of fire alarms in many areas, a shortage of fire extinguishers and obstacles blocking workers’ escape routes. At the same time, those inspections did not even cover whether the factory had fire-safe emergency exits, leaving that responsibility to often lax government inspectors.

¶ Walmart led an effort to block a plan to have global retailers underwrite safety improvements at factories in Bangladesh, according to minutes of an April 2011 meeting as well as several participants.

Walmart has become the world’s largest retailer by demanding the lowest costs from suppliers and delivering the lowest prices to consumers — while promising its customers that the billions of dollars of goods it buys from Bangladesh, China and other countries are produced in safe, nonsweatshop factories. Walmart buys more than $1 billion in garments from Bangladesh each year, attracted by the country’s $37-a-month minimum wage, the lowest in the world.

But even as the deadly Nov. 24 fire at the Tazreen factory has stirred soul-searching inside and outside the apparel industry about the effectiveness of its global factory monitoring system, some nonprofit groups say Walmart has been an important obstacle to efforts to upgrade fire safety. That is partly because it has shown little interest in changing the existing practice of demanding that the factories, often operating at razor-thin margins, meet fire safety standards at their own cost.

“They are squeezing the manufacturers, and the manufacturers are happy to get away with the minimum compliance that they can,” said Farooq Sobhan, a former Bangladeshi diplomat involved in past negotiations between Bangladesh and the United States on trade policy for apparel. “It is kind of a vicious cycle.”

Walmart says it is doing everything it can to prevent factory fires. “Walmart has been advocating for improved fire safety with the Bangladeshi government, with industry groups and with suppliers,” Kevin Gardner, a Walmart spokesman, said in an e-mail. “We firmly believe factory owners must meet our supplier standards, and we recognize the cost of meeting those standards will be part of the cost of the goods we buy. We know our customers expect this of us and our suppliers.”

Walmart also insists that several of its apparel suppliers were using the Tazreen factory without its approval. Two days after the Tazreen fire, Walmart said it had “de-authorized” use of the factory, but without saying when or why; two weeks later it said it had taken the action “many months ago.”

But critics say that the inspection reports discovered in the Tazreen factory— which were obtained by The New York Times from a labor advocacy group — underscore fundamental problems with Walmart’s supply chain in Bangladesh, allowing it to avoid addressing safety problems it should have dealt with.

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With South Korean Election, Policy Toward North Will Change

But the question of how much aid and investment South Korea should offer the North, and under what conditions, has become a major point of contention, one that could create discord with Washington.

The neck-and-neck race pits Park Geun-hye, the candidate of President Lee Myung-bak’s conservative Saenuri Party, against Moon Jae-in, who represents the liberal Democratic United Party.

Their backgrounds are as different as those of any two Koreans could be. Ms. Park is the daughter of Park Chung-hee, who ruled South Korea with an iron fist from 1961 to 1979. Mr. Moon is a former student activist who was jailed in the 1970s for opposing Mr. Park’s dictatorship.

But both agree that Mr. Lee’s policy of backing international sanctions to compel North Korea to end its nuclear programs and refraining from dialogue with the North has failed to tame its hostility toward the South. North Korea’s successful launching of a three-stage rocket on Wednesday has not changed the candidates’ promises to provide more generous aid to the North and to try to hold talks with its new leader, Kim Jong-un.

“The launch doesn’t seem to be having much effect on the current presidential contest one way or the other,” said John Delury, a professor at Yonsei University in Seoul who is an expert on North Korea. Here in the South Korean capital, not far from the North Korean border, “most people don’t see this rocket launch as a security threat, for the simple reason that North Korea can use quicker and more effective short- and midrange capabilities to strike the South, if it ever came to that,” Mr. Delury said.

For the Obama administration, the timing of the transition of power in South Korea is problematic. After the rocket launching, American officials talked of imposing “Iran-like sanctions” on North Korea, suggesting curbs on investment and banking outside the country and on purchases of North Korean goods. Finding new sanctions that truly hurt will be difficult; the North is already one of the most penalized countries on earth.

But winning approval of those sanctions in the United Nations Security Council will be even more difficult if South Korea appears to be headed in the other direction. Susan E. Rice, the American ambassador to the United Nations, clashed on Wednesday with her Chinese counterpart over whether the rocket launching merited a response at all; the Chinese argued it did not. Marshaling support among United States allies will be almost impossible if a new South Korean president is announcing renewed initiatives.

“This could put us back to where we were in the Bush administration,” one American diplomat said, “where the White House was going in one direction, imposing sanctions, and a South Korean president was going in the other.”

President Obama and President Lee have pursued a policy of “strategic patience,” isolating and penalizing North Korea for its provocations and hoping that China would rein in its ally. China never did.

“The United States is more than willing to let South Korea take the lead on North Korea — as long as it is comfortable with the general direction,” said David Straub, deputy director at the Shorenstein Asia-Pacific Research Center at Stanford University. “The Obama administration will only be willing to go so far unless and until Pyongyang signals a genuine willingness to negotiate away its nuclear and missile programs on reasonable terms.”

Mr. Lee’s liberal predecessors, Kim Dae-jung and Roh Moo-hyun, pursued a “sunshine policy” of reconciliation and economic cooperation with North Korea from 1998 to 2008. Billions of dollars of South Korean investment, aid and goods flowed into the North to encourage it to shed its isolation and hostility, and to try to reduce the economic gap between the two Koreas and the cost of reunification in the future.

When the political pendulum swung toward Mr. Lee, who took office in 2008, he reversed the policy and said the North would need to give up its nuclear weapons if it wanted South Korean largess to continue. In the years that followed, the North cut off all official dialogue, conducted its second nuclear test, launched a long-range test missile, was accused of sinking a South Korean warship and fired an artillery barrage at a South Korean island.

“Lee Myung-bak’s policy did nothing to stop North Korea from expanding its nuclear capability or change its behavior — it only worsened the problem,” said Mr. Moon, who wants to revive the sunshine policy.

David E. Sanger contributed reporting from Washington.

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