[Reader-list] Syed Zain Al-Mahmood: Bangladesh (Rana Plaza) Compensation Fund Far Short of Goal (WSJ)
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Wed Apr 16 00:29:44 CDT 2014
Bangladesh Compensation Fund Far Short of Goal
Retailers That Used Collapsed Factory Have Donated $15 Million; $40
Million Still Sought
Syed Zain Al-Mahmood
April 10, 2014
DHAKA, BangladeshNearly a year after the collapse of a garment-factory
complex in Bangladesh killed more than 1,100 workers, labor groups say
global retailers still haven't put up the funds needed to compensate the
A trust fund set up earlier this year by labor groups and clothing
companies said it would raise $40 million to help survivors of the Rana
Plaza disaster and the families of those who perished. So far, the fund
has collected $15 million.
"Unless brands pay up, there is the very serious possibility that the
families of victims will not receive proper and adequate compensation,"
said Scott Nova, executive director of labor-monitoring group Worker
According to the Rana Plaza Donors Fund website, only about half of the 29
international brands that labor groups say produced clothes in the doomed
factory building have made contributions. The fund is overseen by the
United Nations' International Labor Organization.
The collapse of Rana Plaza focused international attention on substandard
working conditions in Bangladesh, which has become a major supplier of the
low-cost fast fashion sold in the U.S. and Europe.
Families that lost breadwinners in the collapse and survivors, some
dealing with debilitating injuries, have struggled due to lack of income
and the costs of medical care, according to local labor unions.
Mahmuda Akter and her husband, Habib Ullah, were both working in Rana
Plaza when its walls buckled on April 24. She was injured. Her husband
died. "It's been almost a year. Doesn't anybody care if we live or die?"
Ms. Akter says she has been preparing to file a claim with the trust
because she needs money to raise her year-old daughter. "My daughter
Sumaiya was born three weeks before Rana Plaza," she said. "She deserves a
chance in life."
The fund, set up to coordinate the payment of compensation funds, has
received 238 claims since it began accepting them last month, according to
Bangladesh's Labor Ministry. The claims will be evaluated on a
case-by-case basis by a committee, and the amount of compensation will be
decided taking into account lost income, emotional distress and medical
and funeral costs.
Some retailers have said they won't participate in the fund.
Italian retailer Benetton SpA, said it hadn't contributed because the fund
envisages "a purely voluntary contribution system, one which was not at
all proportionate to each company's presence in Bangladesh. We did not
share this principle because it does not take into consideration the fact
that companies generate production risks also in terms of the size of
their orders to suppliers."
The statement said the company had decided to "concentrate funds and
efforts to support the victims and their families" through an alliance
with Brac, a Bangladeshi nongovernmental organization.
Labor activists have criticized Benetton and other brands that shunned the
common approach. "The so-called independent donations fall far short of
full compensation," said Mr. Nova of the Worker Rights Consortium. He said
the trust fund is "the only inclusive, transparent" compensation program.
"The 29 brands that sourced from factories within Rana Plaza either at the
time of the collapse or in the recent past have combined profits of well
in excess of US$22 billion a year," said Ineke Zeldenrust, of the
Amsterdam-based labor rights group Clean Clothes Campaign. "They are being
asked to contribute less than 0.2% of these profits to go some way towards
compensating the people their profits are built on."
Brands that contribute to the fund aren't required to disclose the amounts
they donate, but typical donations have ranged between $500,000 and $1
million, according to the fund's website.
Wal-Mart Stores Inc. WMT -0.65% combined with two other U.S. retailers to
donate $2.2 million to the fund, according to an announcement last month
by the fund. Labor groups have complained that the size of the
contributions is too small compared with the profits of the companies
Wal-Mart has said it had no production in Rana Plaza at the time of the
collapse although it acknowledged that a supplier produced clothing at a
Rana Plaza factory in 2012. The company said at the time of its donation
late last month that its contribution to the victims' fund underlined its
commitment to raise standards in its supply chain in Bangladesh.
Dan Rees, a spokesman for the ILO, said: "The industry must come together
to finance the payments to the victims and related administration of the
scheme as quickly as possible and ensure the victims of this accident
Write to Syed Zain Al-Mahmood at zain.al-mahmood AT wsj.com
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