Boohoo investors launch lawsuit after modern slavery scandal
November 2nd, 2023
Boohoo is facing a £100 million lawsuit from investors after modern slavery allegations wiped more than £1 billion from its value, according to reports.
Sovereign wealth funds, local councils and other investors are planning to bring a lawsuit seeking compensation for shareholders who suffered losses as a result of the allegations, the Daily Mail reports.
The allegations were first published in the Sunday Times in July 2020, claiming workers in Boohoo factories were being underpaid and forced to work in unacceptable conditions. The claims were later verified by an independent review by Alison Levitt KC.
Levitt found “allegations about poor working conditions and low rates of pay in many Leicester factories are not merely well-founded but substantially true” and that “Boohoo’s monitoring of its Leicester supply chain was inadequate and this was attributable to weak corporate governance”.
In the report, Levitt said: “I have concluded that it was inexcusable that at no point was any assessment made as to how the Leicester workforce was to cope with the increased volume of orders.
“I am satisfied that the true reasons for this was that Boohoo did not see it as their responsibility and that that commercial concerns were allowed to prevail.”
While no claim has yet been filed, Boohoo has instructed lawyers at Herbert Smith Freehills to fend off the potential litigation, which involves around 100 institutional investors, the Daily Telegraph reports.
A spokesperson for Boohoo group said: “A formal claim relating to this matter has not been made. If any proceedings are issued in relation to this matter, they will be robustly defended.”
In boohoo’s interim results for the first half of 2023, it said: “There are no contingent liabilities, which in the opinion of the directors are expected to have a material adverse effect on its liquidity or operations.”Last Updated: 3 November 2023