Ottawa's corporate-ethics watchdog says a Vancouver-based mining company has allowed forced labour at its gold mine in the Xinjiang region of China, even though the firm lost control of the project before the alleged slavery took place.
The company, Dynasty Gold Corp., says it's being tarnished by baseless allegations and the timelines make no sense — but ombudsperson Sheri Meyerhoffer said companies are responsible for holdings they jointly control.
The finding Tuesday is the first determination the Canadian Ombudsperson for Responsible Enterprise has made since the office was created by the Liberals in 2018.
"Evidence gathered through this investigation suggests that Uyghur forced labour likely took place at the Hatu Qi-2 gold mine," Meyerhoffer wrote in a report released Tuesday.
China denies all allegations of slave labour in its Xinjiang region.
Tuesday's finding has Meyerhoffer recommending that Canada bar Dynasty from access to trade services and financial support.
The company, which buys mines and contracts out work like exploration and extraction, says it has never received those services.
"They don't have any evidence of us using forced labour … they extrapolate, but where is the hard evidence," Dynasty CEO Ivy Chong said in a lengthy interview.
"We tried to explain, but I think their mind was closed; the decision was made."
Chong added that nobody in the federal government or its Beijing embassy informed the company of human-rights concerns while it was operating the mine, despite frequent contact at the time.
Meyerhoffer has been digging into allegations that Uyghur Muslims sent to what China calls "detention" or "re-education" centres are being forced to work.
China insists the centres are meant to weed out Islamic radicalization after several deadly domestic attacks, as well as lift regions out of poverty.
But there have been widespread concerns of exploitation since 2017.
The United Nations found in mid-2022 that China had committed "serious human rights violations" against Uyghurs and other Muslim minority communities that "may constitute international crimes, in particular crimes against humanity."
A report that same year by Global Affairs Canada found China "is using otherwise legitimate programs for retraining and relocation of unemployed workers as instruments of a broader campaign of oppression, exploitation and indoctrination of the Uyghur Muslim population into Han (majority) Chinese culture."
Meyerhoffer's report says Beijing has cracked down on those trying to investigate the issue.
She found that Dynasty’s mine near Kazakhstan sourced labour through Chinese state-run corporations, including one that was later sanctioned by Canada.
The report cites publications from such corporations and media about Uyghur workers brought to the mine between 2015 and 2020 as part of programs that have attracted scrutiny from human-rights groups.
The groups have raised concerns about non-consensual psychological counselling, language lessons and physical training.
Dynasty lost control of the mine in question in 2008.
Chinese court filings cited in Tuesday's report show the public company had been unsuccessfully fighting the Chinese government to maintain control while repeatedly listing ownership of the mine in its corporate statements.
Meyerhoffer said the ownership means the company is still linked to hiring decisions at the mine.
"Companies do not need to have operational control in order to be involved in human-rights abuse," Meyerhoffer said.
"Dynasty may have lost operational control, that's true. But they remain a majority shareholder of Terraxin, the joint-venture entity (with Chinese state companies). And this relationship is sufficient to find that they are linked to the use of Uyghur forced labour at the mine."
She said Dynasty had not been co-operative in the investigation, and even a company that only has a handful of staff still needs to uphold Canadian corporate standards.
"Dynasty’s disregard for the complaint process and casual response to the complaint itself is disconcerting and falls far short of the (ombudsperson's) standard of good faith participation," reads the report.
Chong said the finding is a blow to a company that has already spent years in Chinese courts trying to recuperate its investment.
She hasn't been surprised that Chinese judges have sided with state companies, but she said she's shocked a Canadian regulator would brand a company as complicit in atrocious acts that occurred while others were in control.
"I do not know what is their objective by doing that. I have no idea. We don't have any avenue to defend ourselves. We're a small company," she said.
She took umbrage with the suggestion in Meyerhoffer's report that her company should have pushed Beijing to end forced labour.
Meyerhoffer's report says her investigation "did not uncover any evidence that Dynasty took steps to assess its potential involvement in Uyghur forced labour abuse at any point."
The report says that because the company was still part of a joint venture running the mine, it needed to come up with human-rights policies when news spread of possible forced labour in Chinese mines in 2017.
It also says Dynasty hasn't published any information about efforts to detect and remediate human-rights abuses, and did not "try to prevent or mitigate risks and impacts by using its leverage to bring the issue up with its business relationships."
Chong said it's laughable that a small, foreign company would have leverage over the Chinese Communist Party.
"The small guys have no way to fight back," Chong said. "They are trying to damage our reputation."
Meyerhoffer said in an interview that she would have accepted a confidential plan from Dynasty for an eventual exit from China, or one outlining actions to advance human rights if it did get control over its mine.
She is planning to issue a follow-up report on the case in 12 months, and hopes Dynasty will reach out for help in following her recommendations.
"It's not too late for Dynasty to start acting to better respect human rights," she said. "There's still an opportunity for a good-news story down the road."
Meyerhoffer announced the probe into Dynasty last July, along with another unrelated investigation. They were the first to be launched since her office was created in 2018.
The case stemmed from a complaint brought by two dozen human-rights groups, including Uyghur groups.
The groups said they would have been open to an outcome in which their complaints were resolved privately, without the companies being named publicly.
The ombudsperson's office has faced sustained criticism by advocates, MPs and Meyerhoffer herself, who has argued the Liberal government didn't give the office enough power to hold companies to account.
Advocacy groups such as the Canadian Network on Corporate Accountability have long called for the watchdog to have the legal right to compel documents and witnesses from companies.
An external legal review Ottawa commissioned raised the same point, while the NDP introduced legislation to address the issue. That bill has sat untouched for two years.
This report by The Canadian Press was first published March 26, 2024.
Dylan Robertson, The Canadian Press