On Sept. 11, 2012, a fire engulfed a factory in Karachi, Pakistan, killing more than 250 garment workers, injuring 50 and resulting in one of the deadliest industrial disasters in history.
Just three weeks before, RINA, an Italian social auditing firm, had awarded Ali Enterprises the coveted SA8000 certification, meaning it met international standards in areas such as minimum wages, child labor and health and safety. Yet auditors missed a number of red flags, survivors said, including missing fire alarms, barred windows and only one open exit.
“While RINA certified the factory as safe, in reality it was a death trap that cost the life of my son and over 250 others,” Saeeda Khatoon, chairperson of the Ali Enterprises Factory Fire Affectees Association, said in a statement. “We as family members and survivors are demanding justice and accountability.”
In 2018, an international coalition of eight human-rights, labor and consumer organizations filed a complaint against RINA to the OECD National Contact Point (NCP) at the Ministry for Economic Development in Rome, noting that the company could have prevented hundreds of deaths if it did its due diligence. Months of mediation later, the group says that RINA has refused to sign the mediation agreement that would have led to payments to the affected families and compelled the firm to improve its auditing practices.
“We are greatly disappointed by RINA’s refusal to sign the agreement,” Khatoon said.
The Italian NCP had proposed that RINA pay $400,000 to victims of the fire and dispatch a representative to express the company’s sympathies to the victims’ families. It also suggested that RINA commit to pursuing improvements of of its own practices by including transparency about RINA’s policies on risk management, corruption and conflicts of interest.
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The complainants said they believed this to be a fair compromise and signed the agreement in March 2020. RINA, however, “suddenly backed out of its commitment to the process and refused to sign before deadline,” the consortium said, adding that the payment to families appeared to be the biggest “hurdle.”
In its final statement, the NCP continued to recommend that RINA to make a “humanitarian gesture” toward the families in the form of financial compensation and by expressing sympathy in person, as well as take proactive steps to shore up the company’s due diligence and certification practices.
A RINA spokeswoman told Sourcing Journal that the company “has no responsibility whatsoever for the fire” that occurred at Ali Enterprises in 2012, “nor has it ever been even involved in the numerous investigations conducted in Pakistan into this tragic event.”
The company chose to participate in the mediation process, however, because it considered it “important to establish, albeit in a context of open and direct dialogue, a constructive productive relationship with the stakeholders and subjects linked to the event, including NGOs, and in the belief of performing a useful bridging function with the world of social accountability to which it belongs,” she added.
RINA, the spokeswoman said, acted with “full transparency” throughout the procedure and has “consistently offered” assistance to the local community, including the financing of scholarships or education institutions as a “humanitarian gesture.”
“This offer has been made in good faith to support progress and social development, in line with the RINA Group’s objectives,” she said. “RINA therefore believes that it has fully fulfilled the purposes and behavioral criteria required by the procedure.”
The spokeswoman did not address questions about why RINA didn’t sign the agreement and if the suggested payout amount was an object of contention.
The tussle throws into relief the structural issues endemic in the social auditing industry, which labor-rights groups argue is impotent, opaque and only serves to benefit corporate interests despite their stated aim of improving working conditions in the garment industry. By providing false assurances around workplace safety, they add, corporate-controlled social audits could even jeopardize more credible and effective remedial measures.
“Perverse incentives, lack of time, and denial of genuine participation of and information to workers create a system that serves as a buffer to protect companies’ images rather than workers,” said Deborah Lucchetti from the Italian Clean Clothes Campaign member Abiti Puliti.
To promote meaningful change, social auditing needs to be overhauled to include greater transparency and legal liability, experts say.
“RINA’s behavior clearly shows that we need mandatory rules on companies’ human rights due diligence that can be enforced through courts,” said Miriam Saage-Maaß, head of the Business and Human Rights Programme at the European Center for Constitutional and Human Rights.