Boohoo’s Leicester sweatshop scandal refuses to die.
Six years after news broke that employees at the ultra-fast-fashion purveyor’s suppliers in the English city were working in unsafe, unsanitary conditions for as little as 3.50 pounds ($4.70) an hour—well below the United Kingdom’s legal minimum wage—even during a nationwide Covid-19 lockdown, Boohoo is now fielding 10 million pounds ($13.4 million) in additional claims from investors.
Among the 11 new investors joining a High Court lawsuit brought by 50 claimants seeking damages from Boohoo after its share price collapse are the Bank of Korea, Stichting Shell Pensioenfonds, the Illinois Municipal Retirement Fund and the Public Employees’ Retirement System of Mississippi. Their additional claims have driven the compensation sought up from 177 million pounds ($238 million) to 245 million pounds ($329 million).
In filings to the High Court in London, lawyers from Fox Williams, the law firm representing the investors, allege that Mahmud Kamani, Boohoo’s co-founder and former chairman, likely knew about conditions at the Leicester factories before the public imbroglio sent the company’s share price toppling 42 percent in July 2020, erasing 1 billion pounds ($1.3 billion) from its market value.
“The claims stem from revelations… about underpayment of workers and unacceptable working conditions within Boohoo’s Leicester supply chain,” they wrote. “The claimants allege that these (and other) matters were not properly disclosed by Boohoo when they ought to have been and that they relied on misleading/untrue statements or omissions.”
An independent investigation led by Alison Levitt, a former legal adviser to the Crown Prosecution Service, found the allegations to be “substantially true,” adding that the e-tailer’s monitoring of the “many failings in the Leicester supply chain” was “inadequate” due to “weak corporate governance.”
At the same time, she concluded that Boohoo did not deliberately allow poor conditions and low pay in its supply chain, did not intentionally profit from them and that its “business model is not founded on exploiting workers in Leicester.”
A spokesman for Boohoo parent Debenhams Group rejected the lawsuit, saying that it “strongly contests the allegations and will vigorously defend any claim.”
At a parliamentary hearing in December 2020, Kamani said he was “shocked and appalled” by allegations of labor abuses, but that any noncompliance occurred at factories that Boohoo didn’t own or control. He also insisted that Boohoo was “committed to making good,” and that the company has “got more right than wrong” since its founding in 2006.
“I cannot possibly know everything in this business, but I do know this is a priority in our business,” he told lawmakers.
