Boohoo has been hit with £10m worth of new legal claims from investors alleging that top executives knew the fast-fashion company was using sweatshops in Leicester to make its clothes.
A further 11 institutional investors have joined a High Court lawsuit against Boohoo after a 2020 crash in its share price, which was triggered by revelations about its use of sweatshops. The new claims have pushed the value of the compensation sought to £245m.
The new investors include the Bank of Korea and Stichting Shell Pensioenfonds, a multibillion-euro pension fund for Shell's employees in the Netherlands.
US pension funds for public-sector employees, including the Illinois Municipal Retirement Fund and the Public Employees' Retirement System of Mississippi, are also among the new institutions joining the claim.
The investors allege that Mahmud Kamani, a Boohoo co-founder, must have been aware of the conditions in the Leicester factories that supplied his company before revelations surrounding the scandal led to a 42pc drop in its stock price.
It was revealed that workers in the "unsafe and unsanitary" Leicester factories were working in "terrible" conditions and often being paid less than the minimum wage.
Employees in the Leicester facilities reported that they worked in cramped conditions for as little as £3.50 an hour and claimed that factories remained secretly open during Covid-19.
The scandal wiped more than £1bn off Boohoo's market value.
An independent review of Boohoo's supply chain, led by Alison Levitt KC, a barrister, later concluded that unacceptable conditions were "endemic" in the clothes sellers' supply chain.
However, the Levitt review also determined that Boohoo did not deliberately allow those poor conditions to exist and did not intentionally profit from them.
By contrast, the investors claim Boohoo's executives must have known about the poor conditions and allege that they failed to disclose the information to investors before the share price crash.
In filings to the High Court in London, lawyers from City firm Fox Williams, representing the investors, said: "The claims stem from revelations… about underpayment of workers and unacceptable working conditions within Boohoo's Leicester supply chain.
"The claimants allege that these (and other) matters were not properly disclosed by Boohoo when they ought to have been and that they relied on misleading/untrue statements or omissions."
A spokesman for Boohoo said: "The company strongly contests the allegations and will vigorously defend any claim."
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