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2005-07-01

Fired Wal-Mart Executive Sues After Blowing the Whistle on Factory Conditions in Central America

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Wal-Mart executive James Lynn was fired from the company, he says, after he blew the whistle on factory conditions in Central America. Lynn documented forced pregnancy tests, 24-hour work shifts, extreme heat, pat-down searches, locked exits and other labor law violations. He is now suing the retail giant. We speak with Lynn’s attorney and a Wal-Mart spokesperson. [includes rush transcript]

A former Wal-Mart executive says he was fired after blowing the whistle on factory conditions in Central America–he documented forced pregnancy tests, 24-hour work shifts, extreme heat, pat-down searches, locked exits and other labor law violations. The corporation says it fired James Lynn for having an affair with a subordinate. Now Lynn is suing Wal-Mart.

Wal-Mart is the largest company in the world. It employees 1.6 million people globally and deals directly with hundreds of factories throughout Latin America and Asia.

James Lynn worked at Wal-Mart for eight years. He was promoted from a local manager to being in charge of troubleshooting for Wal-Mart distribution centers in an entire region of the country. Then Wal-Mart offered him a position in Costa Rica overseeing factory certifications and Quality Control. At the time, Wal-Mart directly operated more than one hundred factories in the region, mostly in Honduras and Guatemala.

A factory inspection report that Lynn conducted and recently provided to the National Labor Committee includes a negative evaluation of workplace environment. The report reads in part, "some exits are locked and not marked during the working hours. All exits need to be marked, unlocked and unblocked at all times. Ventilation in the factory needs improvement." While the factory improved many of its labor practices after an initial inspection, Lynn says his supervisor in Costa Rica downplayed noncompliance. In a letter a Wal-Mart senior executive, Lynn alleged that his supervisor "pressured inspectors to pass factories that have failed final inspections."

Lynn says that factories inspections were often ineffective because managers were told about them beforehand. He told the New York Times "Some of the workers I interviewed said, 'The factory had a general meeting the day before, and we were told, You better not say anything wrong or you're fired.’"

  • Shane Youtz, Lawyer for James Lynn, the Wal-Mart whistle-blower who reported labor abuses in Central American factories and then says he was framed by Wal-Mart for allegedly having an affair. Lynn is suing the corporation in an Arkansas court.
  • Beth Keck, Wal-Mart international spokesperson.

Transcript

This is a rush transcript. Copy may not be in its final form.

JUAN GONZALEZ: We’re joined now on the line from Albuquerque by James Lynn’s attorney, Shane Youtz. Also on the line from Arkansas is Beth Keck, Wal-Mart’s international spokesperson.

AMY GOODMAN: We welcome you both to Democracy Now!

SHANE YOUTZ: Thank you very much, Amy. This is Shane Youtz.

AMY GOODMAN: Shane Youtz, let’s begin with you. The company says they simply fired — they simply fired James Lynn because he was having an affair with a subordinate. Your response?

SHANE YOUTZ: Mr. Lynn was hired as the global services manager, as you indicated. His responsibilities were to administer factory certification. It is unquestioned that he observed inadequate bathroom facilities, mandatory 24-hour shifts, terrible working conditions, mandatory pregnancy testing, and I think even Wal-Mart would admit that within a month of reporting this information to Wal-Mart, and reporting it specifically to high-placed executives, including Mike Duke, he was terminated. And specifically, within eight days of sending a detailed email to Bentonville, he was terminated. So, you know, it is our position that Wal-Mart’s allegation is pure pretext. Mr. Lynn didn’t follow the program and was terminated as a result.

AMY GOODMAN: Beth Keck, your response?

BETH KECK: Yes. Thank you very much for the opportunity to talk with you today. We have looked very carefully at Mr. Lynn’s situation, and it’s very clear that he was, you know, terminated for inappropriate contact with a woman who worked directly for him, who reported to him. We think that Mr. Lynn’s approach at this point in time of saying that he was fired for talking to our senior management about the factories, the conditions there, really just doesn’t make common sense, because his job was actually to go and look at the factories and report back to us what the situation was. I’d like to just give you a little bit of context about the time when he went down to Costa Rica.

AMY GOODMAN: Beth Keck, I’m going to ask you to hold that description for one minute. We are going to break, and then we’ll come back to this discussion about Wal-Mart. Whistleblower or fired for fair reasons. That’s coming up here on Democracy Now! We’re joined by Beth Keck, international spokesperson for Wal-Mart, as well as the attorney for James Lynn, Shane Youtz.

[break]

AMY GOODMAN: We’re talking about a case of a man who has been fired by Wal-Mart. He says he was fired for whistle blowing, for reporting on labor abuses in Central American factories. Then saying he was framed by Wal-Mart for charging that he was having an affair. Our guests are Shane Youtz, the lawyer for James Lynn, and Beth Keck, spokesperson for Wal-Mart. Beth Keck, continue.

BETH KECK: Thank you. Well, I just want to make clear that this is not a whistleblower case, because, in fact, we hired Mr. Lynn to be a whistleblower for those factories in Central America. We had just made a large investment by buying a company called Pacific Resources that had been doing buying, factory inspection and quality inspection for us around the world and in that region. We had then assigned Mr. Lynn an important leadership role to be one of our first Wal-Mart leaders to go down, you know, to run that company for us in that region. And so, of course, we expected the highest standards of him. And we definitely expected him to come back and tell us what he was finding.

One of the reasons that we brought this function in-house was that we felt that working through a third party, our standards that we expected of our factories, was not being as rigorously implemented and executed as we felt as if we had, you know, direct control of it over a company. So, it was very clear that it was, you know, Mr. Lynn’s responsibility to tell us what was going on in those factories. And he did and we’re very glad of the types of reports that he was giving back. We have gone back to the factories that he has inspected, looked at the record and to, you know, actually see what happened. And the company did address the issues that he raised, and in fact, through being able to have direct control over our program, we have strengthened the program and continued to have improvement through the factories that we source from in that region, as well as all regions around the world.

JUAN GONZALEZ: Well, Beth Keck, my understanding is in terms of some of his allegations that they were not only about the conditions in the factories themselves, but they were also about the process that Wal-Mart used in determining if there were any problems. For instance, he claims that there was a set series of questions that every worker had to be asked and that the inspector could not deviate from those questions. He says that basically factories were given notice several days beforehand that the inspection was coming, so if there were any problems with child labor or so forth, they could prepare for them. What about these allegations about the process that Wal-Mart uses to investigate its factories?

BETH KECK: Well, in fact, that was the type of feedback that we were needing from him as the manager responsible for that functional area, that important function. Was the program actually sound, as we were taking it over from Pacific Resources, the company we had purchased? And what we did was not only take the feedback we received from him, but from other employees in the region. In fact, we still have employees working for Wal-Mart today that, you know, from Pacific Resources, that were in this area, and they have actually been promoted. So we find it curious that this is the reason that, you know, he would raise as the reason for his termination, when, in fact, it was due to his inappropriate conduct with a subordinate, a woman who worked directly for him.

AMY GOODMAN: Shane Youtz, lawyer for James Lynn, your response?

SHANE YOUTZ: Amy and Juan, I think the important thing to remember is this: Mr. Lynn observed in all of these things that he observed, including if you tested positive for pregnancy in one of these factories, you were automatically terminated. Mr. Lynn reported this information to Wal-Mart. Wal-Mart continued to import the materials prepared by these companies and sell them at their stores in the United States. And the other important thing to remember is the system itself was flawed. And Mr. Lynn reported that, and the system didn’t change. Mr. Lynn would have to give two or three days’ notice before he went into a factory. And, in addition, Mr. Lynn was limited to interviewing 20 employees, and if on the 18th employee, he found there was something terribly wrong by Wal-Mart’s own policy, he could not interview any additional employees.

BETH KECK: You know, may I please respond to this?

AMY GOODMAN: Yes.

BETH KECK: Yes. Okay. Thank you. You know, Mr. Lynn only worked for us for five months. And his, you know, his job was actually to bring these to our attention. In the case of the pregnancy testing, I’d like to address each of these individually, please. The case of the pregnancy testing — yes, on the — in one report that we have of a factory — it’s an apparel factory in Honduras — we, you know, have the records from that time that on March 19, 2002, and this is when Mr. Lynn was doing inspections, we did — you know, he and his team did find pregnancy testing was being illegally conducted. They stated very clearly in the reports that they told the factory that this was not acceptable and that we, Wal-Mart, required them to stop this practice, because it was discriminatory.

They then went back a month later, in April, and to follow up on it. We did a thorough follow-up report then again, an investigation of the factory in August, so four months later. By September, they had cleared up all of these issues. And, actually, our approach is not to just drop a factory because they have — unless they have very egregious violations. We have worked with non-profit organizations on what’s the best approach to deal with these problems. If you stop engaging with an organization, they’re not going to stop those practices. If we keep having engagement with them and show them better ways to do business, then you tend to — then we tend to have very much better results, which is the case with the particular factory in question.

AMY GOODMAN: Shane Youtz, your response?

SHANE YOUTZ: You know, the portrait painted here by Miss Keck is just — is not consistent with the portrait painted by Mr. Lynn. He indicates that the working conditions were commonplace in the factories that he inspected. He indicated that when he told Wal-Mart about this, they specifically instructed him not to tell executives about it, and he also said that he was being pressured to change certification results. So, to suggest that Wal-Mart was trying to work with these companies, that’s true: they were trying to work with these companies to make sure that goods got into the United States at any cost.

JUAN GONZALEZ: Miss Keck, I’d like to ask you, something doesn’t jibe with me with what you are saying. On the one hand, you are saying that when you see violations by these factories, that you do not cut them off, that you would rather try to work with them to improve the situation. On the other hand, you are saying that Mr. Lynn was immediately fired for the indiscretion of having a relationship with a subordinate. And so, in other words, you’re holding your own employees to stricter standards and immediate firing, but your suppliers, you’re willing to work with them when they make mistakes and violate labor rights?

BETH KECK: We have — I think we have here two different issues and I’d like to separate them out, please. With Mr. Lynn, our company has, like every company, you know, a very strict ethics code, particularly in the area of fraternization. Because I think we all recognize that inappropriate contact is often — you know, particularly toward — you know, is aimed toward protecting subordinates from unwelcome advances. And I think probably through many of your shows, you know, you have seen that that’s usually a precursor to other more serious issues like sexual harassment. So companies, I think universally, you know, do not support fraternization in their organizations, and we have very strict policies about that. We are very strict about ethics within our own company where we have, you know, direct hands, because we really think our company, you know, must have the highest, you know, the highest reputation and standards possible.

And so, we just have a no tolerance policy, and when rumors of this were reported to management, they took it seriously. They investigated the situation and, in fact, when they presented the information both to Mr. Lynn and his subordinate, they both admitted that they had had — that this had occurred. And so we fired them in keeping with our policy. And this is — we apply this to junior associates; we apply it to senior associates. I mean, we have had some very high profile cases in recent months about where we have been very, you know, consistent and strict with our standards. So, that’s how we handled Mr. Lynn. It had nothing to do with his factory certification work.

AMY GOODMAN: Shane Youtz, final comment on this.

SHANE YOUTZ: There was a systemic problem at Wal-Mart and their factories in South America. You know, you have many, many people being pressured to modify factory certification programs, and you have abysmal working conditions. And the bottom line is that the system was designed to keep — continue having the clothes come into America to sell at Wal-Mart stores and not stop the flow of goods. That’s what the program was about.

AMY GOODMAN: I want to thank you both for being with us. Beth Keck, Wal-Mart international spokesperson, and Shane Youtz, lawyer for James Lynn, who has brought suit against Wal-Mart, saying he was fired for whistle blowing, for his investigations of Wal-Mart factories in Central America.

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