Boohoo has ‘significant problems’ in its supply chain, according to journal

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Fashion retailer Boohoo said it will take urgent action to improve governance and oversight of its supply chain after independent report uncovers widespread cases of unsafe working conditions and underpaid staff .

The investigation, commissioned by Boohoo following allegations that factories making its clothing paid workers less than minimum wage, was conducted by prominent lawyer Alison Levitt and released on Friday.

The report found that a complete list of all of Boohoo’s suppliers and contractors simply did not exist; whereas some previous internal investigations into supply chain issues have not been followed up; and that most of the time, a ‘team’ of people in Leicester supposed to oversee the suppliers consisted of one person.

However, Ms Levitt, a former legal adviser to the Crown Prosecution Service, said she was convinced that Boohoo was not deliberately allowing bad conditions and low wages in its supply chain, was not intentionally taking advantage of them and that its business model was not based on exploiting workers in Leicester.

Boohoo has denied the illegal wages of its suppliers.

The review examined 62 suppliers and drew on other supply chain audit reports produced for Boohoo by Verisio and Veritas. It found failures in verifying identity, recording hours, paying wages below the national legal minimum wage, health and safety violations and cases of potential leave fraud.

He added that during an inspection last month, 10 people exited through an emergency exit as auditors entered the premises. At another point in July, two-fifths of the workforce left while the audit was in progress.

Emails and internal reviews suggested the company was increasingly concerned about not knowing enough about what was going on in its supply chain.

Boohoo said he plans to add two non-executive directors to strengthen its board and ensure independent directors have a majority. He will appoint an independent person to oversee how he implements the changes.

Ms Levitt said she was “confident” that the changes Boohoo was willing to make involved “a relatively easy realignment of its priorities and systems of governance.”

The company said there was “ample evidence that the steps Boohoo is now taking to address issues in its Leicester supply chain were implemented almost a year ago.”

“However, with hindsight, we regret that these processes have not progressed quickly enough. ”

The review “identified significant and clearly unacceptable problems in our supply chain and the steps we had taken to address them, but it is clear that we need to go further and faster to improve our governance, oversight and our compliance, ”said John Lyttle, Managing Director.

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