Boohoo in search for new auditor as PWC set to resign

Suban Abdulla
·3 mins read
PwC has held its role since before Boohoo went public in 2014. Photo: Dana Pleasant/Getty Images for boohoo.com
PwC has held its role since before Boohoo went public in 2014. Photo: Dana Pleasant/Getty Images for boohoo.com

Embattled fast-fashion firm, Boohoo (BOO.L) has been dealt another blow as accountancy company PricewaterhouseCoopers (PwC) is allegedly stepping down as its official auditor.

According to the Financial Times, which first reported the story, the auditor is quitting over concerns about the risks of continuing to work for the Manchester-based firm as it faces scrutiny over malpractice in Leicester supply chain.

PwC, which has held its role since before the online group went public in 2014 signalled its intention to resign within the last month, the FT reports.

Boohoo has not returned with comment to Yahoo Finance at the time of publication. PwC declined to comment.

The move comes after a review into allegations that workers were paid as little as £3.50 ($4.60) an hour in Leicester factories supplying Boohoo, far below the minimum wage of £8.72 was conducted by Allison Levitt QC.

Levitt’s review following original reports by the Guardian and Sunday Times, found “many failings in the Leicester supply chain” and recommended “improvements to Boohoo's related corporate governance, compliance and monitoring processes.”

The reports suggested that Boohoo may have relied on factories in Leicester that did not close during lockdown, which could have contributed to the coronavirus outbreak in the city, which saw cases rise.

READ MORE: Factory workers 'robbed of tens of millions in wages' UK retail group tells Priti Patel

Last week, the UK’s retail industry accused the government of failing to act on the exploitation of factory workers.

The British Retail Consortium (BRC) along with Dr Lisa Cameron MP, chair of the All-Party Parliamentary Group (APPG) for Textiles and Fashion, wrote a letter to home secretary Priti Patel urging action for exploited garment workers who lost £27m in earnings since July.

Meanwhile, a joint letter signed by firms including Marks & Spencer (MKS.L), Next (NXT.L) and Asos (ASC.L) along with more than 50 cross-party MPs and peers as well as investors and NGOs, called for the government to introduce a licensing scheme for garment factories in the UK, in July.

It stated a “Fit-to-Trade” licensing scheme “would protect workers from forced labour, debt bondage and mistreatment” by ensuring they are paid the minimum wage and given various other benefits.

The scheme would also encourage companies to source more of their clothing from the UK, supporting the Britain’s manufacturing sector.

READ MORE: Boohoo's found 'many failings' in working conditions and low pay in Leicester supply chain

Other aspects of the company’s wider governance have also raised eyebrows.

In May, it bought the remaining one-third of fashion brand Pretty Little Thing from Umar Kamani, son of Boohoo co-founder and executive chairman Mahmud Kamani. The firm said at the time that the transaction did not require shareholders’ approval under rules on the Aim market, where it is listed.

If confirmed, it is the second time this week an auditor has resigned after Deloitte quit as auditor at EG Group, the petrol station empire built by the Lancashire billionaire brothers Mohsin and Zuber Issa, who recently acquired UK supermarket Asda from Walmart (WMT) in a $6.8bn deal.

The accountancy company quit over concerns that its internal controls had not developed in line with increasing revenues and complexity.