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Boohoo shares tumble as auditor PwC quits in wake of worker exploitation allegations

Problems deepen for fast fashion group as Big Four accountancy firm quits over concerns for its reputation

Ben Chapman
Monday 19 October 2020 20:49 BST
Recent Boohoo report shows workers need to be better protected
Recent Boohoo report shows workers need to be better protected (Getty Images/iStockphoto)

Boohoo’s auditor PwC has resigned after the online £4bn fast fashion retailer became the centre of a scandal over allegations widespread exploitation of workers at its suppliers’ factories in Leicester.

Boohoo’s shares slid sharply on Monday after the company confirmed PwC will no longer sign off its books and it was looking for new accountants.

PwC has conducted audits for Manchester-based Boohoo for the past six years but ruled itself out of bidding for further work over reputational concerns.

The Financial Times reported on Friday that the Big Four accountancy firm had resigned as auditor. PwC has already issued an unqualified opinion on the group’s 2020 financial statements.

The scandal surrounding Boohoo and the Leicester garment industry widened over the weekend as it was revealed the National Crime Agency is investigating some of the £4bn fast fashion firm’s suppliers.  

Police at the agency are looking into allegations of widespread VAT fraud and money laundering after a BBC investigation found evidence that one wholesaler used a network of fake companies to provide inflated invoices for clothes so that VAT could be avoided.  

There is no suggestion that Boohoo knew about any alleged wrongdoing.

Boohoo said: "The group would like to place on record that PwC is still the group's auditor at this time.

"The group's Audit Committee has recently launched a competitive tender process for the group's audit, and will update shareholders at its conclusion.

"PwC signed an unqualified opinion on the group's 2020 financial statements and, having served as the group's auditor since 2014, is not participating in this process."

Boohoo has long faced allegations that some workers in its supply chain are paid substantially below the minimum wage. After new reports in July of rights violations and illegally low pay at some Leicester clothing manufacturers, Boohoo commissioned a top QC, Alison Levitt, to investigate.

Last month she announced her findings which included “serious” and “endemic” issues in the company’s supply chain including poor working conditions, low pay and a neglect for workers’ rights. Boohoo’s bosses had been aware of problems since at least the end of last year, Ms Levitt said.

"Boohoo has not felt any real sense of responsibility for the factory workers in Leicester and the reason is a very human one: it is because they are largely invisible to them.”  

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