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Amazon to pay back $1.9 million after supply chain violation in Saudi Arabia

Amazon has disbursed $1.9 million in reimbursements following supply chain violations in Saudi Arabia, the e-commerce behemoth announced last week. This move is part of Amazon’s broader response to violations of its supply chain standards involving contracted workers in the Kingdom of Saudi Arabia (KSA).

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In 2023, an independent audit of a third-party licensed temporary labour agency, Abdullah Fahad Al-Mutairi Co. (AFMCO), in KSA revealed violations of Amazon’s Supply Chain Standards. These findings were corroborated by external organisations concerned about the treatment of AFMCO employees supporting Amazon’s operations in the region.

When violations of Amazon’s Supply Chain Standards are discovered, the company’s first priority is to work with the associated third-party vendor to investigate, remediate issues, and improve conditions for contracted workers, explains an announcement by the e-commerce giant. Amazon then implements long-term strategies and improves controls with third-party vendors to prevent recurrence and raise overall standards for those workers.

On this occasion, to address the violations in the KSA, Amazon partnered with Impactt Ltd., a third-party human rights expert, to expedite the reimbursement process for workers. The company paid $1.9 million (USD) in reimbursements to over 700 contracted workers.

While Amazon requires its vendors to bear the cost of worker-paid recruitment fees, in this case, the company provided the reimbursement to expedite repayment to the impacted workers.

Also, Amazon has implemented measures to enforce its Supply Chain Standards among its third-party vendors. These measures include strengthening third-party vendor contracts, reviewing vendors’ wage policies, providing additional training to vendors, and improving its communication mechanism for contracted workers.

These actions are part of Amazon’s efforts to ensure compliance with its Supply Chain Standards and to address issues affecting contracted workers in its supply chain.

The company has also secured AFMCO’s commitment to pay its employees in line with their contracts after they cease working at Amazon, and not to move them to a new accommodation site that fails to meet Amazon’s standards.

AFMCO has also established a more robust system to enable workers to anonymously raise grievances.

According to the announcement, Amazon will continue to monitor improvements and progress through ongoing site visits. The company supports contracted workers’ safety and prevents risk by insisting its third-party vendors uphold its Supply Chain Standards, including those outlining responsible recruitment practices and applicable laws in KSA.

Efforts to enhance controls include strengthening third-party vendor contracts to clarify expectations regarding compliance with its Supply Chain Standards, reviewing vendors’ wage policies, including clarification that illegal wage deductions are prohibited, and providing additional training to vendors in the region on how to implement its Supply Chain Standards, including responsible recruitment practices.

Amazon adds that it has also improved its communication mechanism that enables contracted workers to share concerns directly with Amazon’s management.