The brands were avoiding all contacts with their suppliers they owe money to
Bangladeshi apparel makers have threatened to blacklist a number of British brands if they do not pay outstanding debts to suppliers.
The brands are Peacock, Jaeger, Austin Reed, Jacque Vert, Country Casuals, Windsmoor, Baumler of Germany, Bonmarche & Ponden Home, and other brands of Edinburgh Woolen Mills Limited owned by the British billionaire businessman Philip Day.
On May 21, the Bangladesh Garments Manufacturing and Exporters Association (BGMEA) President Rubana Huq wrote to Philip Day, warning him to settle his bills by May 29 or face a complete embargo on doing business in Bangladesh.
In this letter, the BGMEA president said this harsh step comes after receiving dozens of complaints from suppliers that Edinburgh Woolen Mills – the parent company of Peacock and several other brands – was avoiding all contacts from suppliers it owes money to for previous orders.
She also mentioned that this email should be considered as official correspondence and notice from the BGMEA and the Bangladesh Knit Manufacturers Association (BKMEA) to Edinburgh Woolen Mills Limited and its other brands.
BGMEA sources said Edinburgh Woolen Mills Limited and its subsidiary brands owe about $30 million to about 50 Bangladeshi apparel exporting companies.
The British company and its brands were doing business with Bangladesh through various agents, importers, full-service vendors and other third parties, approved and working indirectly and/or directly with each of these companies and brands, BGMEA sources added.
RMG Sustainability Council (RSC) Chairman Nafis Ud Doula said that they cancelled all the orders in the first week of April.
However, in mid-April, they asked for a 70 percent discount to all suppliers. At the end of April, they again asked for a 30 percent discount. Whenever any suppliers asked for a formal mail, they would never provide it, he added.
However, unfortunately, from the first week of May, they began looking for new suppliers, sending random emails to the manufacturers, which means they want to dump the existing suppliers, said the RSC chairman.
"They never respond to any suppliers' communications over email or phone," he added.
Edinburgh Woolen Mills was waiting for the suppliers to surrender to them with a substantial discount. It was trying to get a huge advantage out of this pandemic situation, said Nafis Ud Doula.
"Unfortunately, certain buyers are taking undue advantage of the Covid-19 situation and demanding unreasonable discounts despite pre-Covid-19 contracts and despite continued business activity, which is not only impossible to grant, but also in violation of local laws and internationally acceptable standards," reads the letter sent by the BGMEA president.
Moreover, this defies all the principles of ethical sourcing and governance that international brands and organisations expect from the industry and all its stakeholders, the letter adds.
It should be noted that the demand for the discounts will not only be financially catastrophic but will also expose our members to various claims and liabilities from regulations, banks and other third parties, which will eventually legally implicate the buyers themselves, the letter added.
In light of the given circumstances, the BGMEA and BKMEA, upon fully taking into consideration the predicaments of both the exporters, the buyers and the local laws and regulations of Bangladesh have taken certain decisions about your alleged claim for discounts, said Rubana Huq.
"For goods already shipped and handed over to your nominated freight forwarders before March 25, Edinburgh Woolen Mills, which includes all its affiliates and associates, shall make the payment as per the originally agreed terms of payment i.e. concluded agreements. This payment has to be settled no later than May 29, 2020," said BGMEA official letter.
For orders already placed, negotiation between the exporter and the buyer should be concluded within June 5, 2020. All negotiations must be mutual and not unilateral by the buyer.
Deferred shipment, deferred payment and permitted discounts may be allowed provided that the exporters and the buyers have agreed in this regard and such agreement complies with local laws and regulations.
Any discount beyond permissible limits may lead to adverse and legal consequences on Edinburgh Woolen Mills including all its affiliates and associates.
Until the above issues are settled and agreed, the Associations will not issue any new UDs to its members for any order of Edinburgh Woolen Mills, which includes all its affiliates and associates. Similarly, BEPZA may also withhold issuance of EP.
BGMEA requested the British billionaire to comply with the aforementioned requirements and settle all outstanding dues as prescribed above.
"If the instructions provided hereinabove are not followed, we will have no option but take the decision to place an embargo and black-list the buyers and their agents who do not comply with our instructions, which will prevent them from conducting business with our members in the future either directly and indirectly," said BGMEA president.
In that letter, the BGMEA president also mentioned that a copy is also being sent to the Bangladesh High Commission in London, the Ministry of Foreign Affairs, BEPZA, Ministry of Commerce, the Bangladesh Bank and the Bangladesh Investment Development Authority, where Edinburgh Woolen Mills/Peacock and/or its affiliates is registered as a liaison office, for necessary information and assistance for compliance of this notice by all buyers.
The letter is also being sent to the British High Commission and any other concerned ministries or departments.