The co-founder of Boohoo is likely to have been aware of “terrible, unsafe and unsanitary conditions” at Leicester sweatshops supplying the fashion retailer before the scandal became public, according to claims made in a High Court lawsuit.
Mahmud Kamani, who launched Boohoo in 2006 and now serves as its executive chairman, probably knew that workers in factories producing clothing for the company were being underpaid and subjected to “arbitrary abuse and humiliation”, lawyers acting for investors have alleged. The legal filing argues that it is not credible that Mr Kamani was unaware of how those factories were operating, adding that Boohoo’s denial of knowledge at board level is unconvincing.
The claims form part of a lawsuit in which investors are seeking £177m plus interest in compensation for losses suffered after Boohoo’s share price collapsed in 2020. The company’s stock plunged by 42pc following media reports that workers in Leicester factories supplying Boohoo were earning “significantly less than the minimum wage”, with some reportedly paid as little as £3 an hour. Investigations also highlighted long working hours, cramped conditions and buildings described as dilapidated and unsafe.
City law firm Fox Williams, representing the investors, claims Mr Kamani had long-standing personal relationships with some factory owners, attended social events with suppliers and visited certain manufacturing sites. Lawyers are now seeking disclosure of Mr Kamani’s communications with two of his sons, Umar and Samir, arguing that the messages are likely to contain relevant information. Both sons held senior brand roles within the business at the time.
The court documents state that Mr Kamani is “highly likely” to have discussed supply chain issues with his sons, particularly given their positions in the company. Labour rights activists have also alleged that factory workers were expected to continue working while ill with Covid-19 during periods when Leicester was subject to strict lockdown measures.
The scandal wiped more than £1bn off Boohoo’s market value and severely damaged its reputation. In the aftermath, the company went on to acquire Debenhams in a £55m deal in 2021 and later rebranded under the department store’s name.
The lawsuit accuses Boohoo of failing to take social responsibility seriously and not striving for high ethical standards across its supply chain. It also highlights the Kamani family’s influence, noting they held around 37pc of the company’s shares and that Boohoo retained characteristics of a family-run business. The filing alleges links between family members and certain Leicester suppliers, including claims that some factories were introduced to Boohoo by Mr Kamani’s brother, Jalal, a former trading director.
Boohoo, represented by Herbert Smith Freehills, said there was no reasonable basis to involve other members of the Kamani family and stressed that none held senior leadership roles. The company said it strongly contests the allegations and will vigorously defend the claim. The investors include CalSTRS, the California State Teachers’ Retirement System, which manages more than $390bn in pension assets.
