EWM and its subsidiaries owe Bangladeshi apparel suppliers around £27m
British clothing brand Edinburgh Woollen Mill (EWM) continues to source readymade garment products from Bangladesh through subsidiaries, despite not paying dues to local manufacturers for goods sourced during the Covid-19 crisis – even after three years.
Though the victimised manufacturers were able to get a temporary injunction imposed on Peacocks – a subsidiary of EWM – on May 19 against sourcing goods from Bangladesh, the company is still doing business in the country using another name.
These exporters later went to the Dhaka District Judge court for another injunction, but the court rejected their application. They then filed an appeal to the High Court, and it issued a rule in this regard on October 9.
Then, on October 17, the High Court imposed an injunction on EWM and their subsidiaries against doing business in Bangladesh till November 17. Justice Md Ashraful Kamal gave the order at a hearing on the appeal of Designtex Group.
Speaking to The Business Post, Designtex lawyer Barrister Imtiaz Moinul Islam said, “We had sought injunction against EWM and their all subsidiaries in a lower court. But the District Judge had rejected our application.
“Later, we appealed to the High Court and our plea was granted.”
Designtex Group, one of the victims, had exported goods worth around $0.48 million to the British clothing brand. Designtex had hoped that the temporary injunction issued on May 19 against Peacocks would help local clothing manufacturers get paid, but this is yet to happen.
Speaking to The Business Post, Designtex Managing Director Khandaker Rafiqul said, “After the injunction on Peacocks, the group is now continuing business through an alternative name.
“A case is now pending in the High Court. To secure our due payments, we do not have any alternatives to creating legal pressure on EWM and its subsidiaries.”
The owner of another victimised company, preferring anonymity, said, “We are facing a severe financial crisis due to low export orders, but the brand still did not pay us. When they announced bankruptcy, we were navigating troubled waters due to the pandemic crisis.
“We are surprised to learn that after committing such a big scam, this brand is still doing business in Bangladesh, and some exporters are receiving their orders.”
What exactly happened?
During the Covid-19 period, the EWM filed for bankruptcy to avoid paying dues to the sourcing companies, reportedly.
Later, the company was acquired by Peacocks – a subsidiary of the same brand and continued sourcing from Bangladesh. After the takeover, Peacocks declined to pay EWM dues. Bangladesh’s exporters claimed that this is a trick of EWM for not repaying their dues.
Bangladesh Garment Manufacturers and Exporters Association (BGMEA) claims that the EWM and its subsidiaries owe Bangladeshi apparel suppliers about £27 million.
BGMEA leaders say that the EWM is involved in unethical business practices during the early pandemic period, and cancelled work orders worth $8.2 million without any warning.
Amid the situation, two apex bodies of the apparel sector – BGMEA and Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) – wrote jointly to the EWM owner Philip Day.
After receiving no answer, the BGMEA threatened to ban EWM, as well as its affiliates and third parties, such as agents, importers, and full-service suppliers, who do business with them directly or indirectly.
Bank information shows Philip and EWM made Tk 2,670 crore and Tk 12,950 crore in profits respectively till March 2 of 2019. But the EWM did not pay the dues and continued business through Peacocks.
Amid the situation, four victimised exporters – Designtex Knitwear, Designtex Fashion, Knit Bazaar, and Bottoms Gallery – filed a claim on March 14 last year, seeking Tk 5.98 crore in payments from EWM for the items they had delivered.
Joint District Judge (in-charge) Kazi Mushfiq Mahbub Robin of the Dhaka District and Sessions Judge Court had imposed a temporary injunction on Peacocks from doing business with any garment factories in Bangladesh using the brand name “Peacocks.”
The court said if that injunction was not imposed, the defendant would continue to defraud and harm Bangladesh’s garment sector.
Southern Designers, a clothing manufacturer in Bangladesh, owe nearly $1 million to that company. An official of the apparel marker said, “We tried to get paid, but both the EWM and Peacocks are unresponsive. They however continue to do business in Bangladesh.”
