We’re used to seeing litigation and regulatory enforcement around modern slavery, but here is something different. According to Australia’s The Canberra Times,
“A labour court, in the Amazonian state of Pará, on Friday ordered VW’s Brazilian subsidiary to pay compensation of 165 million reais [more than USD$30 million] over the illegal exploitation of workers in the 1970s and 1980s, the Brazilian public prosecutor’s office for labour said.
According to the office, the fine is the highest ever imposed in Brazil for modern slave labour…
According to the allegations, hundreds of temporary workers at the farm, also known as Fazenda Volkswagen, were subjected to long working days and degrading working conditions.”
Where this goes from here is anyone’s guess. It could end up an isolated case, be a precedent for others in Brazil or influence courts (or plaintiffs) in other countries. If that happens, I expect to see it added to the list of long tail litigation risks in corporate financial disclosures.
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