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Walmart and clothing manufacturer Centric Brands are reportedly investigating their Cambodian supply chains over claims that they illegally employ inmates through forced labor.

The allegations: Inmates at Correctional Center 2, Cambodia’s largest women’s prison, are allegedly illegally employed to produce garments and other textile products for export as part of a rehabilitation program. Speaking to Reuters, former inmates claimed that some of the items appeared linked to Walmart and Centric Brands, which both source from Cambodia.

The ex-inmates said they made shirts, trousers, slippers and shopping bags. They allegedly worked standard hours for a measly $1.75 to $5 a month.

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Some said they did not have employment contracts and that prison guards simply took their names before they ended up at the factories. Those who refused to work were allegedly transferred cells or forced to kneel, while others paid prison guards to evade the labor.

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Legal status of prison labor: Cambodian law allows private individuals and organizations to enter into contracts that would allow inmates to work for them. However, forced labor and the export of goods produced by prisoners are both illegal.

The allegations risk Cambodia's eligibility for the U.S. Generalized System of Preferences, which grants duty-free benefits to eligible developing nations based partly on their prohibition of forced labor. Cambodia reportedly exported $2 billion worth of goods to the U.S. in 2020 through the program.

How authorities have responded: The American Apparel and Footwear Association first raised “strong concerns regarding credible reports” about the matter to Cambodian officials last November. After an investigation by an inter-ministerial committee, three companies — Chia Ho Garment Industrial, IGTM and W Dexing Garment — were fined $50,000 each and suspended from exporting for three months until July 31.

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Cambodian officials have indicated plans to clarify laws regarding prison production for rehabilitation and commercial subcontracting. However, progress on the subject is expected to depend on the priorities of the newly elected government.

What Walmart and Centric Brands are doing: Both companies have launched investigations into the allegations, according to Reuters. Walmart said its probe is ongoing as of mid-August. On the other hand, Centric Brands said it “has not found any evidence supporting the claim that prison labor was used” regarding an IZOD-branded polo shirt in question. However, the company reportedly terminated its relationship with one factory.

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