3. Independent monitoring
In May 1998, Nike announced that it would allow independent monitoring of its factories. Nike announced its commitment to involve NGOs in monitoring factory conditions and that they would publicly release summaries of the results of this monitoring. One and half years later, it is still unclear which NGOs would be involved and summaries have not been made available. Nike's definition of independent monitoring includes the use of for-profit accounting firms such as PricewaterhouseCoopers *21) and Ernst & Young.

Ernst & Young's monitoring of labour conditions was highly criticised when at the end of 1997, TRAC *22) made public Ernst & Young's first audit of labour and safety conditions at a facility producing for Nike. This report, produced in January 1997, was a confidential assessment of the Tae Kwang Vina plant producing sports shoes for Nike in Vietnam. Only after the Ernst & Young report was leaked to the press through TRAC did Nike make the report public. In an analysis and critique of this audit, TRAC Research Associate Dara O'Rourke arrived at some striking conclusions: although Ernst & Young found the Nike subcontractor in violation of a number of Vietnamese labour and environmental laws, the auditing company nevertheless concluded that the factory was in compliance with the Nike Code of Conduct. *23)

More recently an audit at the Formosa/Evergreen facility in El Salvador, done by the auditing company Verité at the request of Adidas, also presented interesting results. Formosa produces sportswear for both Adidas and Nike. Adidas released the Verité report in August 1999. Although this report fails to mention or investigate earlier reported incidents such as working hours of 60-70 hours per week, it still reports numerous violations of labour standards. Most workers interviewed had experienced, witnessed, or heard of incidents of verbal, physical, or sexual harassment of workers by supervisors. Workers reported (and were observed) being subject to systematic verbal abuse if they didn't work fast enough. There is a lot of pressure on workers to fulfil quotas which are fixed in such a way that workers only reach them once or twice a week after working overtime. The majority of workers interviewed said that they did not have the right to form a union, and many cited incidents in which workers had been dismissed for trying to organise. The workers who spoke to Verité made it clear that they were taking a risk in talking to the auditor and were afraid of the consequences. *24)

Given that Formosa has been a Nike supplier for a number of years, why weren't these systematic abuses discovered and rectified by Nike's own monitoring? This clearly calls into question the ability of auditors like Pricewaterhouse Coopers *25) to be able to detect breaches of Nike's Code of Conduct and other labour infringements. In June 1999, Dusty Kidd, Nike's Labour Practices director, wrote in a letter: "I believe Formosa has in good faith implemented changes over the past several months in areas where we have asked for improvements, as we ask for similar improvements of all factories based on SHAPE inspections, PwC monitoring visits, and other forms of oversight." *26) Verite's research was conducted in June 1999, twelve months after European media had exposed problems at Formosa and eight months after a former worker from Formosa had toured the United States.

Fair Labor Association
Nike is one of the founding members of the Fair Labor Association (FLA), the body created to implement the standards set by the Apparel Industry Partnership (AIP). This initiative, a collaborative effort between international businesses, academic institutions, and the U.S. government, has been severely criticised from different angles *27) and has lost most of its glamour since it was founded in 1997. Two unions, including the Union of Needletrades, Industrial and Textile Employees, withdrew from the AIP in 1998, stating that they "cannot continue to participate in the Apparel Industry Partnership on the basis of the agreement recently reached by some company and NGO members of the Partnership."*28) One of the participating human rights groups, the Interfaith Centre on Corporate Responsibility, refused to sign the "Preliminary Agreement" that was drafted by a subset of the AIP, and withdrew from the association. In 1998, when students at numerous US universities started to protest at bad labour conditions, Nike encouraged the universities to join the FLA, to boost up the image of the Initiative. More than 100 universities joined. *29) These universities pay a fee to FLA for monitoring duties which have yet to begin.

Student activists at various universities remain sceptical about the ability of the FLA membership, which includes companies as Nike, Reebok, etc, to implement a monitoring program. Therefore in October 1999, they proposed to form the Workers' Rights Consortium, which according to them is designed to implement full public disclosure of licensees and provides a mechanism to verify information received through disclosure and worker complaints. *30)

Meanwhile, in April 1999 Nike announced the formation of the Global Alliance for Workers and Communities, a grouping of business, public, and non-profit organisations that is supposed to involve local NGOs in the assessment of workplace conditions through interviews, focus groups, and worker surveys. This Alliance, which includes the World Bank and the International Youth Foundation, *31) has just started so at this time not much can be said about its value.

*21) PricewaterhouseCoopers is now Nikes global labor practices and financial auditor
*22) Transnational Resource & Action Center, United States
*23) Dara O'Rourke, "Smoke from a hired gun", Transnational Resource and Action Center, San Francisco, 1997
*24) Report sent around to interested organisations by Adidas
*25)Nike claims that PricewaterhouseCoopers monitors all their factories
*26)The letter was sent to the Nike International mailing list on 16 April 1999
*27)The critique, communicated by Medea Benjamin of Global Exchange, is as follows: Its standards are too weak to guarantee real improvements in workers' lives.
*it allows workers to be paid poverty wages
* it allows excessive overtime
* it does not adequately uphold the right of workers to organise independent unions. Its monitoring system is neither transparent nor sufficiently independent of the companies to be credible.
*it requires only 10 percent of a company's factories to be monitored annually
* the companies can choose their own monitors
* the companies have undue influence in picking which factories will be monitored
* the government and foundations will be called upon to help subsidize the companies' monitoring system
* mechanisms for getting input from workers and NGOs are too vague
* it withholds important information from the consumer E-mail to the Nike International mailing list on 11 December 1998 On Nike's website Http://www.nikebiz.com/labor/ngo.shtml
*28)E-mail to the Nike International mailing list on 11 December 1998
*29) On Nike's website http://www.nikebiz.com/labor/ngo.shtml
*30)e-mail to the Nike International mailing list, October, 22 1999
*31)Critics have commented on the absence of experience of the International Youth Foundation in matters of workers rights