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 At five sites inspected, workers "complained they were suffering from hunger and cold, and all of the locations were overcrowded and with terrible sanitary conditions," according to a statement issued Friday by Jaqueline Carrijo, who led the inspections last month.
The target of the probe, Brazil Renewable Energy Co., known as Brenco, apologized over the weekend and said it is fixing the problems at its rural operations, which turn sugarcane into ethanol.
Clinton's connection is via an investment in Brenco by The Yucaipa Cos., a U.S.-based fund in which Clinton was a senior advisor until last year. His investment in Brenco is valued between $15,001 and $50,000, according to a financial dislosure report submitted last year by his wife, presidential candidate Hillary Rodham Clinton.
Yucaipa, whose chairman is prominent Democratic billionaire Ron Burkle, holds an overall 2.8 percent stake in the initial $200 million raised by Brenco last year to start up operations in Brazil's booming ethanol sector.
Bill Clinton spokesman Matt McKenna said that the former president's investment made via Yucaipa was small but that he had been assured Brenco was "committed to the highest ethical standard with regard to the treatment of its workforce and of the environment."
"The president finds these allegations deeply troubling and expects Brenco to move swiftly to ensure that those responsible are held accountable," McKenna said, adding that Clinton is "taking steps to ensure that there is an appropriate transition for his business relationships should Senator Clinton become the Democratic nominee."
The Brazilian labor probe focused mostly on living conditions for the workers, including 17 who were paying rent to live in housing overrun by rats and cockroaches, Carrijo said. In addition, trucks lacked special seatbelts for workers who ride atop the vehicles as they throw sugarcane seedlings to the ground, she said.
Brenco chief executive Henri Philippe Reichstul traveled Monday to personally inspect the living arrangements of his company's workers. He said in an interview that the 17 workers cited by Carrijo were not living in company housing, but that the company agreed with labor inspectors that there were housing problems for the remaining 116 workers.
No workers are "in this situation any more," he said. "If there are fines to pay for it, we will pay the fines. We are not breaking the spirit or the confidence that we got from our shareholders to start a project of sustainable growth."
Details of the investigation were first reported Saturday in the newspaper Folha de S. Paulo, Brazil's largest.
Reichstul, the former chief executive of Brazil's state-run oil company, said the problems happened while the ethanol company was mobilizing 3,500 workers to plant sugarcane on 86,500 acres in three central Brazil states.
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 Many of those hired had to be recruited to move near the sugarcane plantations because they live far away, and the scramble to erect and set up living quarters coincided with weeks of torrential rainstorms.
Brenco's investors include Vinod Khosla, a venture capitalist who was one of the co-founders of Sun Microsystems; America Online founder Stephen Case; Hollywood producer and Democratic fundraiser Steven Bing, another close Clinton ally; and former World Bank President James Wolfensohn.
The company is run by Henri Philippe Reichstul, the former chief executive of Brazil's state-run oil company, Petroleo Brasileiro SA.
Yucaipa spokesman Frank Quintero characterized the fund's investment in Brenco as small and said it has no management role.
"Newspapers report that Brenco has taken immediate action to remedy the situation," he said in a statement. "If that is not the case we will sell our shares in the company."
Brazil is the world's second-largest producer of ethanol after the United States, but is the No. 1 exporter. Experts say Latin America's largest nation could become an ethanol superpower because its sugarcane is more efficient for ethanol production than the corn used in the U.S.
UNICA, Brazil's association of sugar and ethanol producers, has acknowledged that working conditions in Brazil's cane fields have caused an image problem that could hurt exports.
While cane cutters receive good salaries by Brazilian standards, they spend long hours in the hot sun and suffer a litany of bone and muscle injuries and machete cuts. Their eyes and lungs are punished by ash from working in fields recently burned to facilitate cutting and to kill off rats, snakes and scorpions.
Most of Brazil's sugarcane-ethanol operations are owned by Brazilian individuals and companies, but foreign investment is increasing rapidly.
Reichstul said Brenco is committed to providing decent living conditions for workers, and that their quarters include dormitories and restaurants with areas set aside for sports fields and game and television rooms.
[Associated
Press; By ALAN CLENDENNING]
Associated Press writers Devlin Barrett in Washington and Peter Muello in Rio de Janeiro, Brazil, contributed to this report.
Copyright 2008 The Associated
Press. All rights reserved. This material may not be published,
broadcast, rewritten or redistributed.
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