269: Empowering Businesses to Create a Slave Free World, with Matt Friedman

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Dr. Sandie Morgan is joined by Matt Friedman and they discuss how businesses play a role in combatting human trafficking by auditing their supply chains, educating corporate executives, and developing tools for businesses.

Matt Friedman

Matt Friedman is an international human trafficking expert. From 2006 to 2012, Matt was the Regional Project Manager of the United Nations Inter-Agency Project on Human Trafficking (UNIAP) in Thailand, an inter-agency coordinating body that links the United Nations system with governments and civil society groups in China, Cambodia, Lao PDR, Myanmar, Thailand, and Vietnam. From 1991-2006, Matt worked for the United States Agency for International Development (USAID) in Thailand, Bangladesh and Nepal. For over a decade, he worked passionately to design and manage both domestic and regional human trafficking programs. He also helped establish a counter-trafficking regional training centre, participated in resource mobilization, and produced two award-winning international films about sex trafficking. Matt is a technical advisor to numerous governments. He is frequently cited in the news media, has been invited to speak at major conferences around the world, and is the author of nine books.

Key Points

  • About 0.2% victims of human trafficking receive any assistance.
  • Business can be a catalyst for change due to the presence of labor trafficking in supply chains and the consequences of neglecting to address it.
  • “Rescuing” a victim involves understanding the desperation that brought them to exploitation and the opportunities they have access to after.
  • In order for change to happen, corporate executives need to understand the problem and their own company’s supply chain and recruitment methods.

Resources

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Transcript

Dave [00:00:00] You’re listening to the Ending Human Trafficking podcast. This is episode number 269 Empowering Businesses to Create a Slave Free World, with Matt Friedman.

Production Credits [00:00:11] Produced by Innovate Learning, maximizing human potential.

Dave [00:00:31] Welcome to the Ending Human Trafficking podcast. My name is Dave Stachowiak.

Sandie [00:00:37] And my name is Sandie Morgan.

Dave [00:00:39] And this is the show where we empower you to study the issues, be a voice, and make a difference in ending human trafficking. Sandie, we have had so many conversations over the years about the importance of partnerships and the importance of working closely with businesses, of course. And we’ve many times had a conversation that involves the word “global”. It’s even in the name of the Global Center for Women and Justice. Today, I know that Matt is going to really help us with some wonderful perspective on both, of looking at things through the lens of business, but also to be able to look at our world as we really need to in almost every context through a global lens. I’m so glad to welcome Matt Friedman to the show. He’s an international human trafficking expert and CEO of the Mekong Club. He has served the United Nations and Thailand linking civil society and governments in Asia. His work also includes more than a decade of working with USAID, which is the United States Agency for International Development in Thailand, Bangladesh and Nepal. He worked passionately to design and manage both domestic and regional human trafficking programs. He’s also helped establish a counter trafficking regional training center, participated in resource mobilization, and produced two award-winning international films about sex trafficking. Matt is a technical adviser to numerous governments and is frequently cited in the news media, and has been invited to speak at major conferences around the world, and is the author of nine books. Matt, what an impressive resume you bring to us. Thank you so much for joining us today.

Matt [00:02:14] Thank you for the opportunity. I’m thrilled to be here.

Sandie [00:02:17] So I met you recently, Matt, and we’ve got a big time difference, but we found a ways to connect, and I’m learning so much about what it takes for businesses to be part of our collaboration. I downloaded your book, “Where Were You? A Profile of Modern Slavery” and I just want to recommend that people go to wherever you purchase books and get a copy of Matt’s new book. The home page, though, of the Mekong Club sums up your mission and strategy so well. I just want to read the title, “empowering businesses to create a slave free world.” And I think we have often focused on how we can empower people so that they don’t become victims, slavery of human trafficking. But we’re really taking and moving the focus to actors who have a lot of power and presence globally. So the next byline is “the Mekong Club is a catalyst for change, uniting and mobilizing businesses to bring about sustainable practices,” everybody knows sustainable is one of my favorite words, “sustainable practices towards the fight against modern slavery.” So my question for you to start, Matt, is why do you believe businesses can be catalyst for change?

Matt [00:04:01] Excellent question. Let me just start off with a little bit of context related to modern slavery. As we all know, there’s 40 million people, out of the 40 million, 25 million are in forced labor circumstances, of which about 16 million are associated with supply chains. Our desire to go in the direction of working with private sector happened all the way back to the time when I was still with the United Nations. This was about 10 years ago. We were looking at the statistics, and at that time the number was 21 million. But when we looked at the number of people that were being helped globally to address this issue, it was estimated to be about 34,000. When you put those two numbers together, it means the world with all of the NGOs and the United Nations government is helping about 0.2 percent of the victims.

Sandie [00:04:48] Wait, stop right there because I know the first time I heard that stat, I was totally, I couldn’t imagine it. So you’re not even talking two percent, you’re talking point two. So it’s not even a whole one percent.

Matt [00:05:03] And if you look at the statistics now and compare the 40 million to the 108,000 that we have documented that we’re helping, it’s still 0.2 percent. So because of this kind of situation, we realized that we were not having as much impact as we thought we were. We went back to the numbers and when we realized that many of the people are in forced labor circumstances who are associated with supply chains, we said we have to deal with the private sector. We have to get to know them. We have to find out what they know and don’t know to see whether or not we can engage them. And that was kind of the genesis of this.

Sandie [00:05:38] So the private sector that you’re addressing, these are big businesses. How are you expecting them to make change?

Matt [00:05:51] Well, if you stop and look at different private sector organizations or sectors, they have different categorizations. The banks are interested in this topic because the profits generated from modern slavery one hundred and fifty billion US dollars a year. If any of that illegitimate money gets into a bank, it’s money laundering and they get fined and penalized. There was a bank in Austria that was fined 1.3 billion Australian dollars for not taking the time to look into this. When it comes to the kind of manufacturing world, they have to be concerned about this because they have supply chains and within their supply chains, many of them have been auditing tier one, the top level where they kind of assemble things, but they haven’t looked at the second and third tiers, where they have the component parts, the zippers, the shoelaces, the soles of their shoes or the raw materials. And so as they start looking down, they begin to find that there’s forced labor in those circumstances. The hospitality industry has to be concerned because they have construction that could be fraught with modern slavery, they have third party contractors, migrants that end up in the hotels that could be treated with indebtedness, and they also have sex trafficking. And lastly, retailers are being sued all over the world because they’re buying, for example, seafood from Thailand, which is considered to be tainted by modern slavery. These lawsuits result in naming and shaming and embarrassment of these different organizations. So they have to be concerned about this.

Sandie [00:07:18] That reminds me of a conversation that I had with Ben Skinner in episode 247, and he made the point that holding companies accountable for their actions is important, but pressuring them to cut ties with worksites, that often left the workers in a worse place. And so what is it that we need them to understand so that it doesn’t put other people in jeopardy?

Matt [00:07:48] Ben is a great champion of kind of addressing this particular issue and has been doing things for a long time. And what I like about Ben’s approach is he identifies something and then goes to the company and says, well, I’ll give you six months to decide what the end of this story is so they can fix things. He’s absolutely right. If we find a forced labor circumstance where people are disenfranchised and then we, the company terminates the agreement, then these people are in worse situations. So the prevailing advice is always to do what you can to fix what exists before you move to a situation where you terminate the agreement.

Sandie [00:08:25] And we’ve seen that happen right here in Orange County where our task force started back in late 2004 and our whole focus was on rescuing victims. And it didn’t make any sense to us when we would find someone and they didn’t want to be rescued. It’s like, OK, but I’m I have a roof over my head. This is paying off a debt for my uncle in another country. And when we, in the case of Shyima that we’ve interviewed her here before, her parents had sold her as a child housemaid to pay off her sister’s debt. So when she was rescued, they told her she had to go back and work for those people. So how do we begin to change our community perceptions of what a rescue really looks like?

Matt [00:09:24] Well, I mean, I’ll just give a sex trafficking example. In Nepal, where I was for eight years, you had girls that were tricked and deceived and forced into the brothels. And, you know, for the first six months, they wanted out. But after that, when they found out that their family found out and they had no place to go, they said, Well, I have to stay in the brothel. You know, there’s no place for me. If you try to take me out, where am I going to go? What am I going to do? The same situation happens with people in forced labor circumstances. And in fact, during COVID, what we’re seeing in, for example, in Bangladesh and this is an example that I recently heard people are going to the factories and saying, I’ll work for nothing if you just give me room and board and a place to stay because I’m desperate. Desperation does a lot of things to motivate people to allow themselves to be exploited. And we have to take that into consideration.

Sandie [00:10:12] Wow. It’s complicated, and there are a lot of different aspects to understand. And you mentioned migrant labor and that kind of recruitment seems to be a major theme. How does a corporate executive in a beautiful C-suite begin to understand that issue for their company? And why does he or she need to understand that?

Matt [00:10:38] Well, one of the first questions that C-Suite needs to understand is how big is their supply chain? Where are the employees coming from? How are they being recruited? Many of them don’t know that, but they should. And the reason for this is that within the recruitment process, there is an inherent exploitation that often takes place. A person from Nepal is told, Well, you can go in a $250 work in Malaysia, but before you do that, you have to pay $2000. Person says I don’t have $2000. The recruiter says, Well, don’t worry about it. We’ll lend it to you. Sign this agreement. They don’t understand the interest. The additional fees and $2000 quickly becomes $5000, so they end up going to Malaysia. But they ended up working for two or three years just to pay back the debt and the interest which keeps compounding. That’s the issue that we say in about, see in about 65 percent of the Southeast Asia trafficking cases where indebtedness holds a person in place. And that’s one of the things that we work with companies on to help them to understand that if you work with a factory, ensure that none of those migrants have indebtedness. If they do, you either pay the debt or have the factory pay the debt. And this is kind of a trend that we’re seeing all over the world.

Sandie [00:11:48] So I had a conversation recently because I’ve been investigating and trying to understand this better, and the person I spoke to said, I wasn’t involved in that recruitment. It doesn’t affect me. But there does seem to be some kind of risk for a company and not knowing is not a good defense. Am I right or wrong?

Matt [00:12:15] It’s it’s kind of like if you say that I did pay a particular tax fee because I didn’t know about it. It’s the same defense. It doesn’t work. You have to know about these things. And there’s a tremendous vulnerability for organizations in the United States. Because of the Customs and Border Protection scenario, which says that if a company is accused of modern slavery, their goods could be seized on the border and won’t make it into the United States, not only in the U.S. but in other countries as well. A vulnerability of somebody making a declaration that those employees within the factories that exist within a person’s supply chain are indebted, is enough for that process to take place. It’s enough for this to make it into the newspapers and for naming and shaming and market share loss to take place. So companies have to be concerned about this and much of what we do related to remediation, working with companies and helping them to sort things out, is to focus on ensuring that this indebtedness does not exist.

Sandie [00:13:16] So explain that process of mediation that you just referred to.

Matt [00:13:23] Well, generally what happens is an audit identifies that in fact, employees have this indebtedness. The next step is to identify how many employees and to calculate the amount of money that they basically owe and for there to be a process to remediate that money back to them, to give them that money. Now again, there are different approaches. Some kind of brands say to the factories, This is not our responsibility. We work with you. There can be no indebtedness, so you as the factory have to pay it back. In some cases, brands actually participate in that process. But prior to being able to continue working with a particular factory, something has to change to ensure that indebtedness is not in place. And that’s a complicated process because, you could have people who have different levels of indebtedness and how do you calculate it, how do you send that money back? How do you avoid people within the organization or the factory saying, Well, wait, what about me? You know, shouldn’t I get some money? So it’s it’s a very difficult, complicated process.

Sandie [00:14:28] Wow. So when we’re talking about business, we you mentioned earlier some financial services and the amount of money out there, and I’m curious about how Mekong Club works to empower businesses around how they handle the money and how they transfer money. Can you expand a little bit on why the case in Australia occurred and they had to pay a $1.3 billion fine?

Matt [00:15:04] That’s correct. Australian dollars. OK, so in this particular case, I’m not going to mention the organization. They were allowing online sexual exploitation of children live streaming to take place. There were some indicators that they shouldn’t be doing this and they didn’t pay attention to it and then they got fined. So you’re talking about probably profits of around three or four hundred thousand, resulting in a fine of 1.3 billion. So you’re really talking about a huge hit. As a result of this, the financial community is doing a number of things and we’re working with them on this. The first thing is to develop typologies. What a typology does is analyze the relationship between a perpetrator in a victim at various steps along the way and then identifies transactions that take place in each of those steps. We then look at which transactions could be potentially indicators or red flags of a nefarious activity taking place. And then we bundle those together and we use them to compare it to big data. So let me give you an example. In the United States, there was a nail salon chain run by some Vietnamese people. Some auditors identified transactions that were taking place after hours, the hours were from nine in the morning till nine o’clock at night. But these transactions were at two three four o’clock in the morning. When they looked into it, it came to realize there was a sex trafficking ring within that business. So the nefarious kind of packaged red flags that they can search on would be transactions after hours around two hundred dollars for a particular type of business. So this process of analyzing data helps to protect them from being in a situation where they are identified as being associated with modern slavery.

Sandie [00:16:44] Wow, I suddenly want to go back to school and become an auditor so I can find those after hour transactions. I know early on in our task force it we paid a lot of money for investigations and surveillance and people investigating a so-called nail salon. This sounds a lot cleaner and easier to do.

Matt [00:17:09] Well, can I talk about one of our tools related to audits that that it helps to address this? It’s called the Apprise app. It’s a combined effort of the Mekong Club and an organization called diginet, and the way it works is an auditor has a phone and on the phone is flags on the front of the screen. So the auditor goes to potential migrants for which he or she doesn’t know where they come from and gets them to press the flag from where they come from. With headphones on in that person’s language, the phone then says, We’re going to ask you some questions. If the answer to the question is yes, press green or red. And so even if the manager is there standing watching this, they can’t hear what’s going on. So the questions are, do you have indebtedness? Do you have your passports? Are you being treated correctly or whatever? As a result of this process, we can triage in real time what’s actually happening with migrants within a factory. Prior to this because translation services were not available these people would not be identified. They would not get their voice heard. But this particular approach has allowed for significant increase in forced labor ILO indicators being identified simply by using a simple triage tool.

Sandie [00:18:21] That is amazing, and one of the things that has amazed me as I’ve traveled is there often doesn’t seem to be any really well-developed infrastructure, but I see cell phones, mobile phones everywhere, and that does lend itself to being able to have more of a presence, right? Because they’ve got to have the the cell towers to do that sort of thing. OK, so you mentioned this tool, I think you have other tools as well, and I think it’s important for businesses to know how they can begin to understand and integrate those sustainable practices. So can you talk about some of those things, like risk assessment, compliance checklists? What do people need to be looking for when they sit in that C-suite desk?

Matt [00:19:20] Well, the first thing we have is a baseline survey and we try to make it so it’s a manageable number of questions. It doesn’t go into five hundred questions. It’s about 40 questions. And when we work with an organization, we start with that because it helps them and us to identify what the C-suite know. Do they have policies and procedures in place? Do they have training? What is their risk approach in order to identify their vulnerability? What are they do with remediation? How do they address ESG and sustainability? And what other things that they’re doing. Many organizations feel like this issue stops at auditing, but it doesn’t. There’s so many other activities. Once we have that, we spend about 90 minutes with the organization to help them to identify where their weaknesses is. What training do they need? How deep does the training need to go? What type of systems and procedures and codes of conduct do they have in place? Do they have a hierarchy within the organization? What do they do when they find forced labor? You know, what do they do in order to understand what the vulnerability is related to systems and procedures that are out there within the legal system? So many of our tools address training, address making sure that their policies and procedures are in place, giving them the ability to analyze what to do if they find that they have forced labor. So we have a flowchart that kind of tracks the various steps that people have to take. We have a whole slew of webinars and workshops and various other things that go deeper into things like how blockchain can be used to address modern slavery; the direction of ESG, and how that is going to be really relevant in the future to what companies do related to modern slavery. And these tools don’t get generated by us, the Mekong Club. We bring our community together. We have about 60 association members and they’re divided between banking, retail, manufacturing, hospitality and every quarter we debate and discuss what they feel like they need in order to protect their business. And then based on that, we do the build. So we either build it, we get consultants to do it, or volunteers. But the idea is to give them the tools they need to be able to over time address the issue of modern slavery in whatever stage that they’re at.

Sandie [00:21:28] So as I’ve gotten to know you and spent time following your work, I keep learning new words and we have listeners now in 148 countries, and some of this is just brand new for them, this is, they’ve been working at the other end of things with victims. And so I’d like you to do a couple of definitions, explain things for us. What is a blockchain? I know what a supply chain is. What is a blockchain?

Matt [00:22:02] So blockchain is a technology whereby when you put something through this particular mechanism, it gets stuck in a way that it can’t be altered. But there’s also a community that watches over it to ensure that it is the information that’s there is real and transparent and not adjustable. So what blockchain will do basically is to ensure that through the recruitment process, the process within factories of tracking people’s salaries and payments and everything, it basically just makes the information immutable, makes it transparent and makes it easy for auditors to come in and share that this is in fact real. Bitcoin is based on blockchain. It’s basically every single bitcoin transaction has a documented transaction code that is in place, it doesn’t change. So you will see in order to ensure transparency, not only in this issue of modern slavery, but in the entire banking world, blockchain technology is going to become very much a part of everything that we do in the world. And our own personal life as well, because it offers that sense of accuracy, transparency and a sense that something it can’t be changed once it’s been put in place.

Sandie [00:23:22] So am I understanding correctly then, that this will reduce the incidence of money laundering from human trafficking or drug trafficking or anything along those lines?

Matt [00:23:34] Absolutely, because what it will do is it will make the criminals think twice about using financial circumstances or systems before they do something because they can get it tracked back to them.

Sandie [00:23:46] So even if they don’t have like a warm, fuzzy feeling, they want to protect people, they do want to protect their bottom line.

Matt [00:23:54] Well, you know, the interesting thing about people within banks or any of the other private sector organizations is when I came to Hong Kong, people said, Well, you’ll never be able to do something with the private sector because they’re greedy. All they care about is money. They would use slaves for shareholder profits. It’s just not the case. People are people are people are people. You know, people within the private sector send their kids to the same schools as everybody else. So within the private sector, you do have bad actors, but for the most part, you have people who follow rules and regulations and want the world to be a safe place. And so we found a lot of allies within the private sector who are great champions of ensuring that their businesses are safe, not only to protect the bottom line and to protect their company from risk, but because it’s the right thing to do as well.

Sandie [00:24:39] That reminds me I interviewed former ambassador John Cotton Richmond recently in an episode, and he’s really convinced that the intersection of business and human rights, just the basic issue of human rights is a turning point in our battle against human trafficking. And it’s where businesses can really engage and you’re giving them tools to do this.

Matt [00:25:10] Yeah, we work with a lot of companies not only in human trafficking, but we also focus on the human rights aspect and just look at it from this perspective. If you’re a huge company that has four or five hundred thousand employees, if they fix things from the top and put policies and procedures that trickled down through the entire supply chain, not only to their own employees, but to the organizations that they addressed, one intervention with a company can have an influence of millions of people all over the world. So I’m a huge kind of supporter of the idea of the private sector as being part of the solution in response because they do things very efficiently and they do it very fast because they have to. They can’t kind of diddle around, you know, well, we’ll do something next week or next quarter the way the United Nations sometimes does. And some of the governments do, they get things done, they address them and they do it in a sustainable way, so it doesn’t become a problem for them.

Sandie [00:26:04] And kind of on on this same topic, and you mentioned the acronym ESG just a little earlier. I’ve noticed that less and less we’re talking about corporate social responsibility, which is a beautiful, aspirational model, but we’re moving to a stronger maybe there’s more teeth in the policy of ESG, environmental, social and governance standards. What are some indicators, some ESG indicators that business leaders can use in how they develop those policies? Writing reports? How can we do that?

Matt [00:26:47] Well, let me address the corporate social responsibility topic first. It was supposed to allow for the world to see a company’s transaction between themselves and the planet and people and so forth, but I feel like it went off in the wrong direction. Instead of doing that, what it did is it said we are supporting education and disability with grants and contributions, so we don’t try to talk about all those other things because we’re good because our corporate social responsibility kind of display says that. What ESG has done, environmental, social and governance is said no, you have to look at every aspect of your interaction between the planet and your organization and people and communities. And you know what’s happening with your own employees and you have to be able to measure. So initially, it was a voluntary type of thing, but post-COVID, there’s almost an expectation that businesses have now for criteria used to be three: profit, prestige and growth. Now it’s you have to demonstrate business with purpose. So as it relates to human rights, the S related to ESG is pretty much under-served. And a lot of people have said for a long time, it’s hard to measure that, there’s not much information. But that’s not true. There’s lots of information related to transactions, to audits, various other things and the type of indicators that are important is, do you have your organization’s employees trained on this? Do you have C-suite looking at this? Do you have codes of conduct? Do you have risk assessment mechanisms in place? And if so, how deep do they go? What do you do when you find modern slavery? Do you have a remediation plan and approach? And how do you ensure that over time you add to your improvements to ensure that you constantly get better at ensuring that human rights and human trafficking aren’t taking place?

Sandie [00:28:36] Wow. OK, so I’ve been talking about how much I’ve learned. Will you tell people how to find this information.

Matt [00:28:45] This information you can visit our website, you can send me an email directly if you’re interested. And sometimes that’s easiest so that I can just direct what you need to what it is that you have to offer. You know, the Mekong Club, we offer a one hour consultation with organizations that are interested in understanding this issue. We do that because we’re non-government organization and we consider this to be part of our mandate to create awareness and to help organizations understand things. Also, we were involved with an organization, Refinitiv, Reuters and others to look at myth busting. The fact that the S in ESG is not something you you can’t measure. In fact you can, and I’m happy to offer a link for that report as well.

Sandie [00:29:33] I have just learned so much from you, and I look forward to learning a lot more. You’re going to hear from me again and again. I do have his email address and the website is MekongClub.org. So thank you so much, Matt. We’re going to also do a little bit of a bonus for our Patreon subscribers. So if you’re one of our patrons, go online and find that.

Dave [00:30:02] Thank you so much, Matt and Sandie. I really appreciate this conversation and so much that we can all do to really engage businesses and organizations in this effort. Sandie, we’ve talked so much about partnership over the years and what a great opportunity for us to continue that. All the links we mentioned will be in the episode notes. The best place to go is endinghumantrafficking.org. When you’re online, we’re inviting you to take the first step. If you hop online and download a copy of Sandie’s guide, The Five Things You Must Know: A Quick Start Guide to Ending Human Trafficking. It’ll help outline the five critical things that Sandie’s identified that you should know before you join the fight against human trafficking. You get access to it again by going to endinghumantrafficking.org. It’s also the place to go for more information about becoming a patron, the Ending Human Trafficking podcast is building and expanding our community of advocates. By becoming a patron, you get access to exclusive content and you’ll join a community of advocates around the world who are fighting human trafficking in their community. How does it work? Just go over to endinghumantrafficking.org and become a patron through Patreon, and you’ll get access to new content such as bonus conversations like the one we’ll have with Matt in just a bit, and exclusive resources and toolkits. It’s simple and affordable. Just go over to Patreon, or you can go to endinghumantrafficking.org and begin for just $5 a month. That’ll give you access to all of those benefits. And for those who are already patrons, thank you so much for your early support. We’re so excited to bring you more this year. Well, we do, and we’re so glad to have you supporting the show here and the Global Center for Women and Justice at Vanguard University, and we will be back in two weeks with our next conversation. Sandie, look forward to seeing you in two weeks.

Sandie [00:31:51] Thanks, Dave.

Dave [00:31:52] Take care, everyone.

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