14th Oct 2020 10:44
(Alliance News) - Online retailer boohoo Group PLC confirmed it has ended its relationship with a Leicester-based firm which was on Tuesday linked with fraud and money laundering.
A probe by the BBC found a network of companies based in Leicester have been involved in VAT fraud and money laundering.
boohoo said that earlier in October, it dropped Rose Fashions as a supplier after the BBC found one of the Leicester-based firm's directors was part of a money-laundering network.
A court case in 2018 found that Hassan Malik, who in 2018 set-up Rose Fashions, also had entered into "cash laundering transactions" with Rostum Nagra. Nagra was a director at other Leicester-based firms implicated by the BBC probe. The BBC said its investigation found that Nagra is currently an employee at Rose Fashions.
"We would never knowingly conduct business with anyone acting outside of the law and we have always been swift to provide information to regulatory authorities to support any investigation that they are conducting," a boohoo spokesperson said.
"In 2019 we appointed Verisio, compliance and auditing specialists to support us in mapping our supply chain, due to concerns that we had regarding unauthorised subcontracting by some of our suppliers. This work is well underway and once it is completed we will be publishing a list of all of our UK suppliers. In light of the information provided by the BBC on Monday 5 October, we terminated our relationship with Rose Fashions."
Fast-fashion firm boohoo recently arranged for an independent probe of its supply chain and in September said it would make "substantive, long-lasting and meaningful change".
A spokesperson boohoo added: "Alison Levitt QC recently concluded a full review of the companies supply chain in Leicester and Ms Levitt states: 'It has been alleged that boohoo's business model is dependent on the profits which can be made from of the Leicester supply chain, safe in the knowledge that there will be little scrutiny. I do not accept this; I am satisfied that there are sound legitimate business reasons for Boohoo using Leicester to manufacture clothing but for this to be the case going forwards it may require a change of approach, not least in terms of how Boohoo educates and trains its buyers.'
"She goes on to say: 'There is no evidence that the company itself or its officers have committed any criminal offences.'"
The review was launched by boohoo in July following claims it sold clothes made in factories where staff were paid less than the minimum wage.
The Sunday Times newspaper had reported allegations that workers in Leicester's Jaswal Fashions Ltd factory making clothes for boohoo brand Nasty Gal were being paid as little as GBP3.50 an hour and operating without social distancing measures in place.
boohoo denied Jaswal Fashions was ever a supplier, however.
"Jaswal Fashions Ltd, contrary to the media report, is not and has never been a supplier for the group, and does not operate in the unit stated," boohoo said in July.
The firm in September did concede that the independent probe identified "many failings" in the Leicester supply chain and recommended improvements to boohoo's corporate governance, compliance and monitoring processes.
boohoo shares were 0.5% lower at 330.30 pence each in London on Wednesday morning. The stock remains up 11% so far in 2020.
By Eric Cunha; [email protected]
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