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‘I Would Run Out of the Factory if I Saw This,’ Auditor Says of Boohoo Investigation

Boohoo is selling clothes made by Pakistani garment workers who say they earn as little as 40 cents an hour under exploitative and unsafe conditions, a new investigation claimed Tuesday.

Workers from two factories in the industrial city of Faisalabad told the Guardian that they were paid 10,000 Pakistani rupees ($62) a month—far less than the legal monthly minimum wage of 17,500 Pakistani rupees ($109) for unskilled labor—while making items for the ultra-fast-fashion retailer. Insiders claimed workers sometimes pulled 24-hour shifts to meet the rapid turnarounds demanded by the Western market. Video and photographic evidence obtained by reporters also appeared to show potential safety issues, including motorbikes parked indoors next to flammable materials and stacks of fabric in walkways and near a boiler.

“I know we are exploited and paid less than the legal minimum, but we can’t do anything…if I leave the job another person will be ready to replace me,” one worker told the outlet.

The Guardian said it purchased a 30-pound ($40) tracksuit on Boohoo’s website this month that “appeared to match” fabrics and identifying labels seen in video footage filmed at AH Fashion, one of the factories it looked into. When Boohoo was informed of the allegations of underpaid wages, the e-tailer kept the item up for another week, though it suspended the factory, along with JD Fashion, a middleman firm that supplies Boohoo with products from AH Fashion, while it conducted its own investigation.

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Boohoo told the Guardian that a third-party audit at AH Fashion on Nov. 2 found the factory working “with no problems.” AH Fashion acknowledged that it had fulfilled orders for Boohoo as recently as October but insisted that its workers were paid and treated fairly and in accordance to local laws.

“As part of our international compliance programme, AH Fashion received a SMETA [Sedex Members Ethical Trade Audit] audit in November 2020, where no issues of this nature were found, so these allegations are extremely concerning,” it told the outlet.

Madina Gloves, the second factory, denied that it had recently produced garments for Boohoo and that claims of poverty pay and worker mistreatment were “totally wrong.”

Boohoo told the Guardian that while it “will not tolerate any instance of mistreatment or underpayment of garment workers,” it was not aware of any orders with Madina Gloves. It also noted that AH Fashion was not on its approved supplier list for JD Fashion for an order delivered to the United Kingdom on Dec. 11.

The Guardian stands by the evidence it collected, however, pointing out that videos and pictures shot at the two factories clearly show Boohoo’s labels and logos.

Auditing professionals who watched videos highlighting possible safety hazards said the footage raised questions over fire and general safety. One called the scenarios a “recipe for disaster,” adding, “If I [was asked] to do an audit, I would refuse and ask [the] brand to pull goods out of the factory immediately…I would run out of the factory if I saw this.”

“As part of our international compliance programme, AH Fashion received a SMETA [Sedex Members Ethical Trade Audit] audit in November 2020, where no issues of this nature were found, so these allegations are extremely concerning,” it told the outlet.

The Guardian’s report comes days after Boohoo chairman Mahmud Kamani, who also operates the PrettyLittleThing, Nasty Gal, Oasis, Karen Millen and Warehouse brands, faced off with U.K. lawmakers for the company’s role in worker exploitation and underpayment in Leicester, England.

“We have made some mistakes but over the past 14 years we’ve done more right than wrong,” Kamani told the House of Commons Environmental Audit Committee last week. “Our business has been growing between 50 [percent] and 100 [percent] a year at the top line level and processes do fall away; what we are guilty of is not putting processes in fast enough.”

Boohoo said it was taking immediate action to rectify the problems uncovered at its Leicester suppliers by a recent independent investigation, and suggested to the Guardian that it would follow a similar tack in Faisalabad.

A Boohoo spokesperson told Sourcing Journal that it visited AH Fashion on Dec. 17 and found the location to be “under significant construction.” Both the site manager and factory manager told the company that the site had been closed since the start of November and supplied photographic evidence.

“As part of our international compliance program, Bureau Veritas, audit and compliance specialists, are on the ground in Faisalabad and we instructed them to immediately investigate these claims,” the spokesperson said. “As we have previously stated, we will not tolerate any instance of mistreatment or underpayment of garment workers. … Any supplier who does not treat their workers with the respect they deserve has no place in the Boohoo supply chain”

Undeclared subcontracting is “one of the issues within the scope of our Agenda for Change to strengthen oversight in our global supply chain,” the spokesperson added, noting that the firm has hired former judge Brian Leveson, with the support of accounting giant KPMG, to “undertake a root and branch review” and overhaul its supply chain.

On Monday, Boohoo announced its new auditor, PKF Littlejohn, which will replace PriceWaterhouseCoopers (PwC), with immediate effect. PwC had signed off on the retailer’s financial statements since 2014, but announced in October it would be stepping down from the role at the end of its contract—reportedly over fears of reputational damage by proximity.

“The board would like to thank PwC for its services and support provided to the group over the past seven years,” Boohoo said in a statement.