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http://www.businessweek.com/articles/2012-02-20/fishing-as-slaves-on-the-high-seas

Seafood Industry

Fishing as Slaves on the High Seas


(Corrects Yusril's age in photograph caption. Corrects paragraph 22 to show that ling sold to Costco by Quality Ocean did not come from Melilla crews.)

On March 25, 2011, an Indonesian fisherman named Yusril became a slave. Yusril (which is not his real name, to protect his identity) is 28, with brooding looks and a swagger that compensates for his slight frame. That afternoon he went to the East Jakarta offices of PT Indah Megah Sari (IMS), an agency that hires crews to work on foreign fishing vessels. He was offered a job on the Melilla 203, a South Korea-flagged ship that trawled in the waters off New Zealand. “Hurry up,” said the agent, holding a pen over a thick stack of contracts in the windowless conference room with water-stained walls. Waving at a pile of green Indonesian passports of other prospective fisherman, he added: “You really can’t waste time reading this. There are a lot of others waiting and the plane leaves tomorrow.”

Yusril was desperate for the promised monthly salary of $260, plus bonuses, for unloading the fish. His young wife was eight months pregnant, and he had put his name on a waiting list for this opportunity nine months earlier. After taking a bus eight hours to Jakarta, he had given the agent a $225 fee which he had borrowed from his brother-in-law. Other fishermen had taken debts from loan sharks to cover the fee, and a few had sold their possessions, such as livestock, or land. The agent rushed him through signing the contracts, at least one of which was in English, which Yusril could not understand.

The terms of the first contract, the “real” one, would later haunt him. In it, IMS spelled out terms with no rights. In addition to the agent’s commission, Yusril would surrender 30 percent of his salary, which IMS would hold unless the work was completed. He would be paid nothing for the first three months, and if the job was not completed to the fishing company’s satisfaction, Yusril would be sent home and charged over $1000 for the airfare. “Satisfactory” completion was left vague. The contract only stated that Yusril would have to work whatever hours the boat operators demanded.

The last line of the contract, in bold, warned that Yusril’s family would owe nearly $3,500 if he were to run away from the ship. The amount was greater than his net worth, and he had earlier submitted title to his land as collateral for that bond. Additionally, he had provided IMS with names and addresses of his family members. He was locked in.

What followed, according to Yusril and several shipmates who corroborated his story, was an eight-month ordeal aboard the Melilla 203, during which Indonesian fisherman were subjected to physical and sexual abuse at the hands of the ship’s operators. Their overlords told them not to complain or fight back, or they would be sent home, where the agents would take their due. Finally, Yusril and 23 others walked off in protest when the trawler docked in Lyttleton, New Zealand. The men have seen little if any of the money they say is owed them for their work. Such coerced labor is modern-day slavery, as the United Nations defines the crime.

The owners of the Melilla ships did not respond to requests for comment.

The experiences of the fishermen on the Melilla 203 were not unique. In a six-month investigation spanning three continents, Bloomberg Businessweek found cases of debt bondage on the Melilla 203 and at least nine other ships that have operated in New Zealand’s waters. As recently as November 2011, fish from the Melilla 203 and other suspect vessels was bought and processed by United Fisheries, New Zealand’s eighth-largest seafood company, which has sold the same species in the same period to distributors operating in the United States. (The U.S. imports 86 percent of its seafood.) Those distributors have sold those species to major U.S. companies. Those companies — which include some of the country’s biggest retailers and restaurants — have sold the seafood to American consumers.

Yusril’s story, and that of nearly two-dozen other survivors of abuse, reveals how the $85 billion global fishing industry profits from the labor of people forced to work for little or no pay, often under the threat of violence. Though many seafood companies and retailers in the U.S. claim not to do business with suppliers who exploit their workers, the truth is more opaque. Beyond the reach of international regulators, human-rights violations are committed on a daily basis on the high seas, in the name of satisfying the world’s appetite for seafood. This is the story of how that ill-gotten catch may wind up on your plate.

Hours after Yusril arrived in Dunedin, New Zealand, the Melilla 203 officers put him to work on the 193-foot, 26-year-old trawler unloading squid. The rusty ship was in bad shape, and the quarters were musty, as the ship had no functioning dryer for crew linens or work clothes. At first, conditions on board the Melilla seemed comparatively decent to Yusril. Two years earlier, he had worked on the Dong Won 519, operating under the auspices of Sanford, the 130-year old, $383 million New Zealand company and the country’s second-largest seafood enterprise. On that boat, the Korean officers had hit Yusril in the face with fish, and the boatswain had repeatedly kicked him in the back for using gloves when he was sewing the trawl nets in cold weather. Most unnervingly, the second officer would crawl into the bunk of Yusril’s friend at night, and attempt to rape him. Sanford CEO Eric Barratt said that his company’s New Zealand observers, which they placed on all of their foreign-chartered vessels (FCVs), reported that those ships “don’t have any issues with labor abuse.”

When the Melilla 203 set sail to the deep waters of the Southern Ocean, the conditions worsened. The ship trawled for up to two months at a time, between 12 and 200 miles offshore, in what fishing company lawyers and New Zealand officials considered murky legal territory. The officers, who were from South Korea, became coarser with their language, and would taunt the Muslim crew with bacon. The boatswain would grab crew members’ genitals as they worked or slept. When the captain of the ship drank, he molested some of the crew, kicking those who resisted. As the trawl nets hauled in the catch—squid, ling, hoki, hake, grouper, southern blue whiting, jack mackerel and barracuda, along with occasional high-priced bycatch like orange roughy—the officers shouted orders from the bridge. They often compelled the Indonesians to work without proper safety equipment for up to 30 hours straight, swearing at them if they so much as requested coffee or a bathroom break. Even when not hauling catches, 16-hour workdays were standard.

The resulting fatigue meant accidents, which could bring dismemberment in the cramped below-deck factory, where the fish were headed and gutted by hand, then passed along conveyer belts to be frozen. Over the past decade, at least two crew members of the Melilla ships have died, according to local newspaper accounts and reports by Maritime New Zealand, a government regulatory body. Dozens of Melilla crew members suffered injuries, some crippling.

When Ruslan, 36, a friend of Yusril’s on the 203, snapped two bones in his left hand in a winch, it took three weeks before the officers took him to a hospital. The next morning, he was ordered back to work, but, maimed, he could not carry out his duties. So the fishing company removed him before any follow-up medical appointments. “I was a slave, but then I became useless to the Koreans, so they sent me home with nothing,” he said. Today, back in his home village in Central Java, Ruslan’s hand is deformed. While IMS, the recruiting agency, finally paid him $335 for three months of work, the agency has blacklisted him, according to Ruslan, because he spoke to investigators, and it has refused to help with medical bills.

During the last decade, New Zealand authorities repeatedly fined or seized the Melilla ships for ecological infractions, which the country monitored through satellite imagery and inspections by Ministry of Fisheries observers. But crimes against humanity took a back seat to those against the environment. Scott Gallacher, a spokesman for New Zealand’s Ministry of Agriculture & Forestry (which merged with the Ministry of Fisheries last July), explained that “observers are not formally tasked” with assisting abused crew, but at their discretion they could report abuses to the Department of Labour. And yet  Yusril said that when he once whispered a plea for help, an observer expressed sympathy but said that it was “not my job.”

New Zealand authorities had plenty of prior evidence of deplorable working conditions on foreign vessels like the Melilla. On August 18, 2010, in calm seas, a Korean-flagged trawler called the Oyang 70 sank, killing six. Survivors told the Kiwi crew of the rescuing vessel their stories of being trafficked. A report co-authored by Christina Stringer and Glenn Simmons, two researchers at the University of Auckland Business School, and Daren Coulston, a mariner, uncovered numerous cases of abuse and coercion among the 2,000 fishermen on New Zealand’s 27 foreign charter vessels (FCVs). The report prompted New Zealand’s government to launch a joint inquiry, the findings of which will be released on February 23. The researchers gathered testimony from New Zealand observers who saw abuses being committed even after they had boarded ships to monitor fishing practices. “Korean officers are vicious bastards,” one observer said, as quoted in the report. “Factory manager just rapped this 12kg (26 lbs) stainless steel pan over [the crewmember's] head, split the top of his head, blood pissing out everywhere.” The observer said he gave the Indonesian fisherman 26 stitches.

After eight months aboard the Melilla 203, Yusril and two dozen other crew members protested their treatment and pay to the captain. Their move came after a Department of Labour investigator, acting independently, visited the ship in early November, when it was docked in Lyttelton. The official gave Yusril a government factsheet stipulating that the crew members were entitled to certain minimum standards of treatment under New Zealand law. It stated that the crew should have been paid at least $12 per hour. Instead, when total hours were factored in, and deductions, agency fees, and a manipulated exchange rate differential were subtracted, the crew members were averaging around $1 per hour.

The captain dismissed the document and rejected their pleas. He threatened to send them home, to face retribution from the recruiting agency with whom they had signed their contracts. Believing that the New Zealand government would protect them from such a fate, Yusril and all but four of the Indonesian crew walked off the boat en masse, and sought refuge in Lyttelton Union Parish Church. Aided by two local pro bono lawyers, they decried months of flagrant human rights abuses, and demanded their unpaid wages under New Zealand’s Admiralty Act.

Ten miles from Lyttelton, in neighboring Christchurch, stands the headquarters of United Fisheries, the company that exclusively purchased the fish that Yusril and his crewmates caught. The building features gleaming Doric columns topped with friezes of chariot races. It was designed to resemble the temples to Aphrodite in Cyprus, the homeland of United founder Kypros Kotzikas.

The patriarch started in New Zealand with a small fish and chip restaurant. Some 40 years later, his son, Andre, 41, runs a company that had some $66 million in revenues last year. Although three Melilla crew members, citing abuse, had run away nine days before I spoke with Kotzikas, he told me he had heard of no complaints from crew on board the ships, and he had personally boarded the vessels to ensure that the conditions “are of very high standard.”

“I don’t think that claims of slavery or mistreatment can be attached to foreign charter vessels that are operating here in New Zealand,” he said. “Not for responsible operators.”

In an email, Peter Elms, a Fraud and Compliance manager with Immigration New Zealand, cited a police assessment that complaints from crews amounted to nothing more than disputes over “work conditions, alleged (minor) assaults/intimidation/workplace bullying, and non payment of wages.” Elms said that his department had two auditors who aimed to visit each vessel every two or three years, and those auditors had found nothing rising to the level of human trafficking, a crime punishable in New Zealand by up to 20 years in prison.

Kotzikas said that while the national labor laws are “a thousand pages of, you know, beautiful stuff,” he believed that they did not necessarily apply beyond New Zealand’s 12-mile territorial radius. Half of United Fisheries’ annual revenues are generated outside New Zealand, spread across five continents. In the U.S., which imports an estimated $14.7 billion worth of fish annually, regulators are beginning to pay attention to the conditions under which that food is caught. As of Jan. 1, the California Transparency in Supply Chains Act requires that all retailers with over $100 million in global sales publicly disclose their efforts to monitor and combat slavery in their supply chains. The law covers some 3,200 corporations that do business in the state, including several that trade in seafood.

In our interview, Kotzikas said that his company sold ling, a species of fish which is also caught by the Melilla crews, to Costco Wholesale Corp., America’s largest wholesaler, and the worlds’ seventh-largest retailer. As is true with many seafood exports out of New Zealand, the exact quantity of United’s sales to Costco (COST) was untraceable through public shipping records. Costco representatives did not respond to requests for comment about the sales and the abuse allegations.

Dean Stavreff, managing director at Quality Ocean — the Christchurch-based company that exported the fish and of which Kotzikas is the largest shareholder — confirmed that Costco purchases ling that is processed through the facility at United Fisheries headquarters. While he did not oversee that process, Stavreff insisted that all of the ling that Quality Ocean sold to Costco had been caught on “long-line” vessels operated by Talley’s and Okains Bay, companies that “stay well away from the alleged slave labor that is associated with the Melilla [ships].” Costco, which annually audits United’s processing facility, but not its vessels, had issued the company a six-page Supplier Code of Conduct, which lays out minimum labor conditions, and specifically prohibits “slave labor, human trafficking…and physical abuse of employees.”

In New Zealand, there is no independent auditing of catch method once a fish has been landed and processed. Since ling caught by long lines can fetch double the price of those hauled by trawlers, the incentive for fraud and mislabeling is high. As recently as 2008, the Melilla ships were fined over $300,000 for “trucking,” which means misreporting catches from one fishing area to another. New Zealand officials have not, however, accused them or any other vessel of trying to mislabel trawler-caught fish as long-line caught. Costco offers only chilled, long line-caught ling to U.S. consumers, and Stavreff said that thawing frozen ling would degrade it so as to make fraud implausible.

Other large U.S. retailers also do business with United Fisheries. (Thirteen employees at nine seafood companies contacted for this article agreed to speak only on background.) P.F.Chang’s China Bistro (PFCB), the Scottsdale, (Ariz.)-based chain with over 200 restaurants worldwide and more than $1.2 billion in annual revenue, exclusively purchased squid through Turner, a California-based importer which, according to Import Genius and Urner Barry shipping records, bought at least 568,554 pounds of squid from United since November 2010. Squid was one of the most common species caught by fishermen held on the Melilla boats, according to Yusril and other crew members.

Honolulu-based importer P&E Foods has also bought at least 48,940 pounds of squid from United since November 2010. According to P&E’s president, Stephen Lee, his company sells squid to Sam’s Club, the 47 million-member warehouse chain. Lee said that he was unaware of allegations of abuse on the ships of United, a company with which he has done business for “20, 30 years.” He added that he did not know whether any of P&E’s buyers required him or his suppliers to sign a code of conduct for labor practices. Carrie Foster, senior manager for corporate communications at Sam’s Club, said that her company does require such signed agreements from their suppliers.

Another New Zealand company with ties to U.S. retailers is Sanford, the country’s second-largest seafood enterprise. On Nov. 3, I interviewed crew members of the Dong Won and Pacinui vessels, charters catching fish for Sanford, near the docks at Lyttelton. Those crew members risked punishment by speaking: less than a week earlier three Pacinui crew members who had complained were sent back to Indonesia to face the recruiters.

“We feel like we are slaves,” a Dong Won deckhand said, as he simulated a Korean officer kicking him on the ground. Their contracts, issued by IMS and two other Indonesian agents, were nearly identical to those signed by the Melilla crew members. They reported the same pay rates, false contracts, doctored timesheets, and similar work hours and intimidation.

After several desertions over the past decade, New Zealand labor audits of the Dong Won ships turned up some of the same complaints. In 2010 the company assured the government that it would improve oversight of the foreign-chartered vessels and address allegations of abuse and wage exploitation. Sanford CEO Eric Barratt said that observers of his company’s foreign vessels did not find instances of abuse and that three deported Pacinui crew had returned voluntarily.

According to Barratt, his company exports to the United States through at least 16 seafood distributors, the majority through Mazzetta Co., the $425-million, suburban Chicago-based corporation, which is the largest American importer of New Zealand fish. Mazzetta sells the same species caught on the Dong Won and Pacinui ships to outlets across the country. Barratt also said he supplies seafood to the $10-billion supermarket chain Whole Foods Market (WFM). When asked about the specific origins of the Whole Catch New Zealand hoki products, a Whole Foods spokesperson, Ashley Hawkins, said: “For proprietary reasons, we cannot reveal who we source from for our exclusive brand products.” “We are in compliance with the California Transparency in Supply Chains Act,” Hawkins said, in response to the slave labor allegations. “According to the U.S. Department of Labor, New Zealand is not considered high risk.”

Other buyers of Sanford’s fish include Nova Scotia-based High Liner, which sells products containing the same types of seafood as those caught by the indentured fishermen on the Dong Won and Pacinui ships to restaurants across the United States. High Liner’s customers include U.S. retailers such as Safeway (SWY), America’s second largest grocery store chain, and Wal-Mart Stores (WMT). When alerted by Bloomberg Businessweek,  spokespeople for both retailers pledged swift investigations. “As with all of our suppliers, we have a process underway to obtain documentation that [High Liner is] complying with the laws regarding human trafficking and slavery, and that [they are] reviewing their supply chain to insure compliance,” said Brian Dowling, Safeway’s vice president of public affairs, on Feb. 17. “We have not yet received certification from High Liner. However, we are following up with them immediately and asking that they provide us with certification.”

Henry Demone, High Liner’s CEO, said that he “abhorred” slavery and labor abuse, and that his company “tries very hard to do the right thing.” “In the case you’re talking about, we bought from a company whose labor practices in the [processing] plant were fine. We audited that. We didn’t audit the fishing vessels. But we relied upon a well-known New Zealand-based company and their assurance of 100% observer coverage.

It is unclear exactly how much seafood caught by indentured fishermen ends up on the plates of American consumers. Public shipping records—which do not report seafood imported on planes, and only detail some seafood imported to the United States by boat—are sparse, and seafood distributors rarely disclose their specific suppliers. Alastair Macfarlane, a representative of New Zealand’s Seafood Industry Council, declined to comment on which American companies might be buying fish from troubled vessels, such as the Melilla 203.

However, an analysis of several sources of data — including New Zealand fishery species quota, and foreign-vessel catch totals made available by the Ministry of Agriculture and Forestry — suggests roughly 40 percent of squid exported from New Zealand is caught on one of the vessels using coerced labor. Perhaps 15 percent of all New Zealand hoki exports may be slave-caught, and 8 percent of the country’s Southern Blue Whiting catch may be tainted.

Despite the prevalence of the foreign-chartered vessels, which in 2010 earned $274.6 million in export revenue and hauled in 62.3 percent of New Zealand’s deepwater catch, some New Zealand companies have determined that they are not worth the risk. “The reputational damage is immeasurable,” said Andrew Talley, director of Talley’s, New Zealand’s third largest fishing company, which submits to third-party social responsibility audits on its labor standards, a condition of its contract to supply McDonald’s (MCD) with hoki for its Filet-O-Fish sandwiches. “New Zealand seafood enjoys a hard earned and world leading reputation as a responsible fisheries manager, with a product range and quality to match. There is nothing responsible at all about using apparently exploitative and abusive FCVs.”

The main thoroughfare that bisects Yusril’s Central Java village from the sea feeds into a chain of divided toll ways that run all the way to Jakarta. Travelers along the road quickly leave the briny air of the fishing kampungs and pass through green rice paddies, punctuated with water buffaloes and trees bearing swollen, spiky jackfruit. Sixty years ago, Yusril’s grandfather worked that land. Today, like the fishermen, thousands travel along that highway to seek new lives. Some women and girls only make it as far as the roadside karaoke bars, where they enter prostitution. Others make it further, only to become coerced domestic servants in the Middle East. For them, that divided highway is a boulevard of broken dreams.

When I found him last December, Yusril was back in his in-laws’ modest home, tucked well off of a side road. He was out of work, and brainstorming ways to scratch out a living by returning to his father’s trade, farming. IMS, the recruiting agency in Jakarta, had blacklisted him, and was refusing to return his birth certificate, his basic safety training credentials or his family papers. Additionally, the agents were withholding pay, totaling around $1100. In total, Yusril had been paid an average of 50 cents per hour he worked on the Melilla 203. An IMS attorney did not respond to repeated emails requesting comment. When I showed up at the agency’s offices, a security guard escorted me out.

Two of the 24 men who walked off the Melilla 203 returned to work on the ship, rather than face deportation. The ship’s representatives flew the remaining 22 resisters back to Indonesia. When they returned to Central Java, they say that IMS coerced them into signing documents waiving their claims to redress for human rights violations, in exchange for their originally stipulated payments of between $500 to $1,000.

Yusril was one of two who held out. On January 21, when I last spoke to him, I asked him why he had refused to sign the document. “Dignity,” Yusril said, pointing to his heart.

E. Benjamin Skinner is a senior fellow at the Schuster Institute for Investigative Journalism of Brandeis University. He is the co-founder of Tau Investment Management.

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