By Victoria Waldersee and Jan Schwartz
BERLIN/HAMBURG (Reuters) - Volkswagen (ETR:VOWG_p) was challenged by an investor association on Tuesday about the planned audit of its co-owned site in Xinjiang, China, adding to concerns raised by human rights activists that the measure would be ineffective.
The Association of Critical Shareholders (DKA), which represents small investors on environmental, social and governance issues, asked Volkswagen in an open letter how it would ensure results were independent given China's anti-espionage laws.
It highlighted restrictions imposed by the Chinese government on international auditors, including the raid of U.S. corporate auditor Mintz Group's offices in Beijing and reports China instructed state-owned enterprises to stop using PwC, EY, KPMG and Deloitte.
"We therefore see a very high risk that the Chinese government will misuse the audit for its international disinformation campaign to conceal the actual conditions at the plant," the DKA wrote.
Volkswagen did not comment on the specific questions in the letter, referring to its previous statement that it plans to carry out an independent audit this year and is in talks with joint venture partner SAIC on the matter. SAIC declined to comment.
The United Nations and rights groups estimate that more than a million people, mainly Uyghurs and other Muslim minorities, have been detained in recent years in a system of camps in Xinjiang and used for low-paid and coercive labour.
China denies any human rights abuses in the western region.
Volkswagen said at its capital markets day in June it would carry out an independent audit of the site it jointly owns with Chinese state-owned enterprise SAIC in Urumqi, after investors called on the company to do so.