Canada terminates $222M PPE contract following forced labour probe

Public Services and Procurement Canada has terminated two supply contracts with Supermax Healthcare Canada following allegations that the nitrile gloves it manufactured in Malaysia for use by Canadian health care workers were made with forced labour.

These contracts for synthetic rubber medical gloves, worth over $222 million, were part of the $8 billion push led by former procurement minister Anita Anand to equip Canadian health care workers with the personal protective equipment they needed during the COVID-19 pandemic.

In November, the department announced that deliveries from this company were being held until the government could review the results of an independent audit of Supermax's operations.

"Based on the seriousness of the allegations and expected timelines for the final audit results, the Government of Canada has decided, and Supermax Healthcare Canada has agreed, to terminate by mutual consent the two existing contracts for the supply of nitrile gloves," the department told CBC News in an email Tuesday, confirming an earlier report from Reuters that Canada's contract with the Malaysian supplier had ended.

Canada's move follows action taken by U.S. Customs and Border Protection on Oct. 21.

American officials banned shipments of gloves manufactured by Supermax Corporation Bhd. and its subsidiaries based on information that "reasonably indicates their use of forced labor in manufacturing operations." The U.S. investigation identified 10 of the International Labour Organization's indicators of forced labour.

Malaysia provides an estimated two-thirds of the world's supply of disposable medical gloves. (China is the other major global manufacturer.)

Following public allegations last January of human rights violations and the possible abuse of migrant workers among Malaysian glove makers, Canadian officials asked six suppliers — including Supermax — more questions about how their workers were being treated.

Based on the company's initial response, Canada maintained its contracts with Supermax at first, but following the American move it sought further assurances that it wasn't using forced labour. The company hired an independent firm to conduct a comprehensive audit of its operations.

"The Government of Canada is committed to ensuring that it does not do business with companies that employ unethical practices, either directly or within their supply chains," the department said in November as it put further Supermax deliveries on hold.

PSPC has yet to respond to follow-up questions from CBC News about how many gloves were delivered before deliveries were put on hold, or what kind of checks the government made on the company's employment standards before signing the contracts.

In a statement earlier this month, Supermax said it takes compliance "seriously" and has been working to meet ILO standards since 2019. It laid out a new foreign worker management policy and other changes to its human resources practices that it said had been in effect since November 2021.

The competitive global procurement race for PPE at the start of the COVID pandemic in 2020 was described as "the wild West."

British solicitor Nusrat Uddin said that's no excuse for countries to turn a blind eye to labour conditions she compares to "modern slavery."