guidelines, but often adopt a "don't ask, don't tell" stance with these suppliers to optimize margins and assure profits. The problem isn't that these practices go on, but that their existence and the related risks aren't properly assessed against the savings that these low cost suppliers provide. In short, while the benefits, largely financial, of working with these suppliers are well understood, the risks aren't -- and this leads to lopsided decisions that don't take these risks into account. This then would suggest some mitigating practices such as packaging PR responses designed to deal with the problem both retroactively and proactively. These might include philanthropic efforts focused on green activities or protecting children in the affected areas. However, if the problem is extreme -- involving physical abuse, death or suicide -- it is doubtful any mitigation will be adequate. In addition, if one of the mitigating acts actually makes the problem worse -- as might be the case if children were fired and then starved along with their families -- your company might go from being indirectly to directly responsible for the unfortunate and image-damaging acts.
Whether the firm was held accountable should likely be secondary to the reality of the now double crime against the children and families, but it certainly didn't look like it in this case.
The severe penalty could be termination with prejudice for the contract with charges for any resulting costs the company incurs if the supplier is found to have violated any of the critical rules related to child labor, bribery or caustic chemicals, for instance. The termination could last for three, five, 10 years, or indefinitely.