Boohoo is facing a possible investigation that could jeopardise its right to import into the US, as the country’s border agency said it had received sufficient information to probe claims that the British retailer’s clothes are made in conditions that breach its rules.
It follows a complaint by anti-trafficking organisation, Liberty Shared, to US Customs and Border Protection, which alleged that reports of abuse in Boohoo’s supply chain raised questions about the company’s compliance with US rules against forced labour.
Liberty Shared argued that reports about Boohoo’s suppliers, including a review commissioned by the company itself last year, revealed widespread prevalence of undocumented clothes makers, many who were paid illegally low wages and worked for suppliers off-the-books.
The organisation claimed these and other identified practices “satisfy some or all” of the International Labour Organization’s indicators of forced labour, which is what the CBP looks for in an investigation.
The CBP said it did not publicly disclose when it was investigating a company but did, in a letter sent on February 22 and seen by the Financial Times, tell Liberty Shared that it considered the information it had supplied provided sufficient basis to investigate the allegations. CBP did not comment further.
Were the authority to pursue an investigation and find that Boohoo clothes “are made wholly or in part by forced labour”, it may instruct personnel to detain shipments at the US border in accordance with its standard procedures.
Such a decision would be a blow to Boohoo, which makes roughly a quarter of its revenues in the US, its fastest-growing market.
The London-listed company was last summer hit with fresh allegations of labour abuse among its suppliers in the English city of Leicester, where Boohoo is by far the biggest buyer.
A supply chain review commissioned by Boohoo and led by Alison Levitt QC found widespread underpayment of wages and dangerous working conditions, but concluded that the company had not breached the UK’s Modern Slavery Act.
Duncan Jepson, managing director of Liberty Shared, said that rules in the US were stricter than those in the UK when it came to holding companies to account for labour practices in their supply chains.
Boohoo said it had not been notified of an investigation by the CBP but added that it would “work with any competent authority to assure them products from our supply chain meet the required standard”.
The company said its supply chain, and oversight of it, had “significantly improved and strengthened” since last year. It is expected to publish a full list of its suppliers in March in an attempt to improve transparency around how its clothes are made.
Boohoo’s share price, which has largely recovered following the reports of labour abuse in its supply chain last summer, was down more than 4 per cent on Tuesday morning.
The US has recently ramped up monitoring of the supply chains of imported goods. Last year, the CBP issued 13 orders against various companies to stop products from entering the country, more than in the four previous years combined. It is, however, rare for them to stop products produced in G7 countries, with the most recent example being a 1994 ban against video game connectors produced in Japan.
In December, the US blocked palm oil imports by Malaysian producer Sime Darby, roughly six months after a complaint alleging the prevalence of forced labour was filed by Liberty Shared. Sime Darby said it was “committed” to addressing the import ban, adding that an internal assessment had not revealed any “systemic issues”.