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Rana Plaza Fund For Victims Gets First Tranche of Cash from Major Retailers

A fund established to compensate the victims of Bangladesh’s Rana Plaza factory collapse is finally receiving its first tranche of funds from five major international companies.

Inditex, owner of Zara, Canada’s Loblaw, British retailer Mascot, and Spanish brands El Corte Ingles and Mango all made contributions to the fund established to help those affected by the factory catastrophe that killed more than 1,100.

Scott Nova, executive director of the Worker Rights Consortium, called the disbursal a watershed moment in the ongoing effort to properly compensate the families of workers who died in the Rana Plaza disaster. “This is a significant development that sets a precedent of brands taking action to compensate victims of industrial accidents at factories which make their clothes. If other big players in the industry show the same commitment, we will see fair and adequate compensation for the victims of the Rana Plaza disaster.”

The fund is the product of complex negotiations between various brands, international labor groups and the Bangladeshi government. The International Labour Organization (ILO) acted as a moderator of the discussions, helping to broker a final compromise. While the fund is expected to ultimately collect $40 million to cover all claims, that amount could be upwardly revised as claims are still in the process of being assessed.

No U.S. company has committed to contributing to the fund thus far, a point of enduring controversy. After the Rana Plaza factory collapse last April, the two consortia of retailers who outsource apparel production to factories in Bangladesh were separately created to supervise desperately needed reforms and finance costly factory improvements. The E.U.-led Accord on Fire and Building Safety in Bangladesh (AFBSB) plans to inspect the approximately 1,000 factories that directly supply them with garments. There is also a U.S.-brokered Alliance for Bangladesh Worker Safety that covers another 700. However, the new report only legally applies to members of AFBSB and is issued only in its own name.

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Still, there have been signs of notable cooperation between the two organizations recently, which jointly arrived at an agreement regarding the new inspection standards that will apply to all its signatory members. These standards largely apply to factory building safety with particular reference to fire and electrical ordinances. As AFBSB’s website explains, the new strictures are the result of a collaborative effort that involved input from several sources: the National Tripartite Plan of Action, the Alliance for Bangladeshi Worker Safety (ABWS) and the International Labor Organization. The final product is based on the existing Bangladesh National Building Code, albeit in thoroughly revised form.

It remains unclear how much money each of the four retailers have individually contributed. Inditex chose to dispense funds even though it did not source from the Rana Plaza factories.