Solar Giant to Hire Auditor as China Forced Labor Scrutiny Grows

(Bloomberg) -- Daqo New Energy Corp., a key supplier to the solar industry, has shortlisted three global auditors to assess its operations amid international allegations over the use of forced labor in the western Chinese region of Xinjiang.

The New-York listed company, which operates in the region, has denied that it’s involved in the practice or in work programs that the U.S. and others say are used to oppress the local Muslim Uyghur minority. Executives discussed the plan as the firm opened up a Xinjiang plant this week to a small group of investors, analysts and media.

Two specialist U.S. auditing firms -- as well as one of the world’s biggest -- were being considered to carry out a review of the business that’s intended to address those concerns, Chief Financial Officer Ming Yang said Tuesday in an interview. The work would likely last about six months and cost several million dollars, Yang said, declining to name the auditors under discussion.

Sanctions already imposed by the U.S. and some allies over alleged human rights abuses in Xinjiang are seen as likely to be extended to China’s solar companies, raising the risk that imported shipments of Chinese panels could be stopped at the U.S. border. The U.S. Solar Energy Industries Association and others have previously raised concerns China hasn’t allowed independent, third-party audits in the region.

Daqo is one of four companies that operate polysilicon plants in the region that together provide almost half of the global supply of the key building block for solar panels. The region has also become the center of widespread accusations that President Xi Jinping’s government is systematically oppressing minority communities there.

Researchers including Adrian Zenz and Horizon Advisory found links on government and company websites connecting three of the four companies manufacturing polysilicon in Xinjiang to the labor transfer program. Daqo was the one company that hasn’t been linked to the labor transfer program.

Daqo has described its Xinjiang subsidiary as a pilot program of Xinjiang Production and Construction Corps, a government-run organization that’s been sanctioned by the U.S. for ties to alleged human-rights abuses including mass arbitrary detention. Yang on Tuesday denied any link to the entity, saying Daqo doesn’t collaborate with it and that XPCC has no holdings in the company.

A page on Daqo’s website that mentioned the work with XPCC wasn’t accessible on Tuesday.

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