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boohoo says independent review will look into whether laws were broken at factory in Leicester

boohoo said the purpose of the review is to consider its obligations and relevant duties of care

Boohoo Group PLC -
boohoo used social media to its advantage to grow but is now facing a backlash

boohoo group plc (LON:BOO) has said an independent review into working practices at a supplier's factory in Leicester will investigate whether any laws were broken.

The online fashion group added the review will also investigate whether the allegations are well-founded, if boohoo was aware of the working practices at the factory and will make recommendations for improvement in the future.

Alison Levitt QC is leading the inquiry, which follows allegations one factory in Leicester was paying below the minimum wage and not complying with coronavirus working guidelines despite the city being in lockdown.

Working conditions in clothing firms in Leicester have been cited as a reason why coronavirus infections have spiked again in the City.

Boohoo said the purpose of the review is to consider its obligations and relevant duties of care in relation to the workforce in its Leicester supply chain. 

It will act decisively on the independent review's findings and look to embed its recommendations into its strategic planning to help restore confidence in the Leicester garment industry, it added in a statement.

Brian Small, Boohoo deputy chairman and senior independent director, said: "We are pleased to share the terms of reference for the upcoming independent review into our Leicester supply chain. We believe this demonstrates how seriously we, as a board, are treating the recent allegations into our supply chain.”

Boohoo yesterday said it would establish a model factory in Leicester to ensure staff work in fair conditions.  

The AIM-listed company expects to start producing clothes at the site of a former car showroom by September.

Boohoo was AIM’s largest company at the time the story broke at the start of July but has since lost around £2bn from its market value.

The scandal has sparked a round of soul-searching among institutional investors that specialise in ESG (environmental, social, governance) compliant businesses.

MSCI, the rating and index provider, had Boohoo on its second-highest rating thanks to superlative scores on supply-chain labour standards.

“The allegations have raised many questions on corporate governance and culture,” analyst Wayne Brown at broker Liberum Capital acknowledged in a note on Monday.

Quick facts: Boohoo Group PLC

Price: 319.31814 GBX

Market: AIM
Market Cap: £39.83 m

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