Factory: Dragon Sweater Ltd.
Key Buyers: Lidl, New Yorker, Woolworths
Last Updated: 2021
Case Summary
Dragon Sweater Ltd., a supplier to Lidl, New Yorker, and Woolworths, fired at least 500 workers—about half its workforce—in March 2020 and failed to pay them an estimated $133,200 in severance. In all, workers received barely a fifth of what they were legally owed.
Since the closure, Dragon Group, which owned the factory, has continuously refused to pay its debts to the workers, although it is obvious that the company possesses the financial capacity to do so. Dragon Group, which owns two additional garment factories, as well as a life insurance company and an information technology firm, is publicly traded on the Dhaka Stock Exchange and employs 12,000 people. In August 2020, Mostafa Sobhan Rubel, the managing director of Dragon Sweaters boasted, “My factories are fully booked until the end of September and my customers have also booked 60 per cent of my capacity from October towards the end of December.”
Workers have carried out numerous protests to press Dragon Group to fulfill its legal obligations. In October 2020, Dragon Group’s answer to its former employees’ efforts to secure the money it legally owes them was to send a goon squad to assault a group of workers engaged in a peaceful protest. According to local news reports, the attack left 12 workers hospitalized.
A September 2020 Dragon Sweater financial statement lists payments due from German retailer Lidl among the factory’s current accounts receivable as of March 31, 2020, indicating that the factory was producing goods for the retailer in early 2020. Lidl refuses to take responsibility, claiming it left in 2019. The Australian company Woolworths is also identified in Dragon Sweater financial statements as a buyer, as is the German brand, New Yorker. The latter has failed to respond to communications concerning its relationship with the factory.
None of these brands (nor any other buyers that may, to date, be unidentified) has stepped forward to take responsibility for ensuring that the workers who sewed their clothes are paid the severance pay they earned while doing so. As a result, workers have now gone for a full year without receiving most of the compensation they were legally owed at the time of their dismissal.
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