Boohoo knew of Leicester factory failings, says report

A damning report found that Boohoo knew of “endemic” problems across Leicester garment factories in its supply chain, where workers faced serious health and safety violations, including life-threatening fire risks, and were paid less than the minimum wage.

The independent review, which was commissioned by Boohoo but conducted by Alison Levitt QC, found that allegations about low pay and poor conditions were “substantially true” and that Boohoo’s monitoring of its supply chain was “inadequate” because of “weak corporate governance”.

While Boohoo responded to claims of minimum wage violations in Leicester earlier this summer by saying it was “shocked and appalled”, Levitt concluded that senior directors “knew for a fact that there were very serious issues” over the treatment of workers there since December 2019 at the latest.

The review reveals that in an email sent that month to Boohoo’s head of sustainability, Tom Kershaw, after visiting a factory in Leicester, a third-party auditor warned of problems at several suppliers and said: “The factory has the worst working conditions that I have seen in the UK and is not safe for the workers. We have pictures and I will send to you.”

According to the report, he went on: “I honestly feel that Boohoo should stop trading with the factory with immediate effect as it is such high risk. I do not usually make such suggestions but the risk is so high to the Boohoo brand and is a major news story waiting to happen.”

That email prompted Kershaw to warn the Boohoo chief executive, John Lyttle, that the auditor, Verisio, had produced an update that was “not a good read, at all”.

Lyttle, Kershaw and the general counsel, Keri Devine, visited the factories in question days later, with Kershaw and Devine telling Levitt that they found conditions “appalling” and “really, really upsetting”.

However, the QC writes that “somewhat to our surprise”, Lyttle did not reveal the visit or the warning emails in an interview. And she adds: “It was my view that, given that John Lyttle could not possibly have forgotten this, his failure to tell me about it was significant.”

The report said there was no evidence that Boohoo had committed any criminal offences. But it adds: “To the best of our knowledge and belief, Boohoo has not reported any possible criminal offences uncovered by its audits. There may be perfectly proper reasons for this but they have not been explained to us.”

The review also found unacceptable working conditions, where some cramped factories had fallen into disrepair and had no open fire escapes.

“I have concluded that were a fire to break out in some of the buildings in Leicester it is likely that there would be loss of life,” Levitt said.

Her report also found that employee rights were ignored and neglected on a wide scale. Many were not entitled to paid holidays or sick pay, faced “excessive” working hours and were paid less than the national minimum or living wage.

“It is more likely than not that these conditions exist across the best part, if not the entirety, of Boohoo’s Leicester supply chain. The problems we have described are endemic,” Levitt said.

“I have concluded that, in truth, Boohoo has not felt any real sense of responsibility for the factory workers in Leicester and the reason is a very human one: it is because they are largely invisible to them. It is hard for people to empathise with the plight of those of whom they know little.”

The review came after investigations by the Guardian and Sunday Times found that Boohoo had been selling clothes made by factories in Leicester that were paying less than the minimum wage to some workers.

Boohoo apologised and said the report raised “significant and unacceptable issues” and made for “uncomfortable reading”.

A company spokesperson said: “Ms Levitt’s findings clearly demonstrate that we have not matched up to the high expectations we set for ourselves. We would like to apologise to those who have been affected, especially those working in the Leicester textile industry.”

Boohoo listed a number of actions it was taking in response, including engaging with new ethnical and sustainable suppliers, extending its independent auditing programme and annually publishing a list of audited suppliers in the UK.

It also committed to launching and funding a garment and textiles community trust to help support workers’ rights in Leicester and said it would take disciplinary action against anyone placing orders with unapproved suppliers.

“As a board, we recognise that we need to rebuild confidence that these matters will be dealt with appropriately and sensitively, and that they will not recur,” Boohoo’s Lyttle said.

The Levitt report concluded that the retailer did not deliberately allow factory workers in Leicester to operate in poor conditions for low pay and did not intentionally profit from them. “I do not accept that Boohoo’s business model is founded on exploiting workers in Leicester,” Levitt said.

Levitt’s review also found that:

  • Boohoo’s extraordinary commercial growth has been so fast that its governance processes have failed to keep pace.

  • It has concentrated on revenue generation sometimes at the expense of the other, equally important, obligations that large corporate entities have.

  • It has not felt responsible for conditions in the Leicester factories on anything other than a superficial level.

  • On occasions it has failed to appreciate that with the enormous advantages of being a publicly listed company come responsibilities, one of which is on all occasions to act in the best interests of all the shareholders.

Boohoo shares were up 14% in morning trading at 370p.

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