Boohoo co-founder ‘likely aware’ of Leicester sweatshop alleges high court claim

Boohoo co-founder Mahmud Kamani is likely to have known about the "terrible, unsafe and unsanitary conditions" in Leicester factories supplying the online fashion retailer before the scandal became public, according to a High Court lawsuit.

Lawyers acting for investors allege that Kamani was probably aware that some factories were underpaying workers and subjecting them to “arbitrary abuse and humiliation”, according to The Telegraph. The claim forms part of a £177 million lawsuit brought by shareholders seeking compensation following a dramatic share price fall in 2020.

"It is not, the claimants say, credible that Mr Kamani was unaware of the conditions in which those factories were being operated," the lawsuit states.

Boohoo’s shares fell by 42% after reports emerged in 2020 that workers in Leicester factories supplying the business were being paid significantly less than the minimum wage, with some earning as little as £3 per hour. Staff were also said to be working long hours in cramped conditions and dilapidated buildings.

The controversy wiped more than £1 billion off Boohoo’s market value at the time. The company later acquired Debenhams out of administration in a £55 million deal in 2021 and subsequently rebranded the group under the Debenhams name.

City law firm Fox Williams, representing the investors, claims Kamani (who serves as Executive Chairman) had longstanding relationships with some of the Leicester suppliers, attended social events with factory owners and visited certain sites in person.

Mahmud Kamani

Lawyers are seeking access to communications between Kamani and his sons, Umar and Samir Kamani, arguing that messages may contain relevant information. Both sons previously held senior brand roles within the group.

The lawsuit alleges Boohoo failed to "take its social responsibility seriously" and "did not strive for high standards in ethics throughout its supply chain" before the scandal broke. Some suppliers were allegedly introduced to Boohoo by Kamani’s brother, Jalal, the company’s former Trading Director.

In response, lawyers for Boohoo, from Herbert Smith Freehills, said: "There is no reasonable basis to include members of the Kamani family other than Mahmud Kamani," adding that none of the other family members held senior leadership positions within the retailer.

Boohoo said it "strongly contests the allegations and will vigorously defend any claim."