Monday, January 25, 2021

Textile suppliers for fashion retailer Boohoo investigated for money laundering and VAT fraud

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The National Crime Agency (NCA) is investigating companies that supply the fast-fashion giant Boohoo on suspicion of money laundering and VAT fraud.

Britain’s crime-fighting agency is looking into the Leicester textile industry, which plays a key role in the supply chain of Boohoo, the £4bn retail behemoth owned by the Kamani family.

NCA officials have evidence from whistleblowers in the city’s garment factories, who are understood to have provided documents that detail alleged money laundering and VAT fraud.

Andrew Bridgen, the Conservative MP for North West Leicestershire who has also helped the investigation, said: “It appears that the criminality in Leicester’s garment supply industry extends much further than modern slavery and into endemic VAT fraud and money laundering.

“Even more sinister are claims that much of the cash supplied to the fake invoicing companies originates from the sale of illegal drugs. So the VAT fraud allows money from this evil trade to be laundered at the same time.”

The NCA inquiry was triggered after The Sunday Times revealed that workers in a Leicester factory were being paid as little as £3.50 an hour to pack garments destined for Boohoo.

Last month Alison Levitt QC, who was hired by Boohoo to review its working practices, published a damning report which included allegations that “some factory owners in Leicester were committing VAT fraud”. Witnesses described three factories in Leicester “engaged in large-scale VAT fraud in a way that even the HMRC would be unable to detect”, it said.

Last week a BBC investigation claimed that a network of Leicester clothing manufacturers, some of which supply Boohoo, were involved in money laundering and VAT fraud. It is not suggested that Boohoo was aware of any illegality.

Meg Hillier, a Labour MP who chairs the Commons public accounts committee, has written to Jim Harra, head of HM Revenue & Customs, asking him what action the agency will take.

Boohoo said that it “will continue to support any investigation by the authorities, including into allegations of money laundering and VAT fraud in any companies said to be in its supply chain.

“Boohoo has not been nor will it be knowingly a party to any criminal conduct. Any direct or indirect supplier under investigation will have their contract suspended and any company or associated individual found guilty of criminal offences will result in the relevant contracts being summarily terminated. There is no excuse for such criminal conduct.”

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