Bangladesh factory safety group seeks to delay closure, flags lingering risks

By Zeba Siddiqui and Ruma Paul

DHAKA (Reuters) - A group set up by European fashion brands to improve factory safety in Bangladesh has sought a stay on a court order that calls for its local operations to end this week, its executive director said on Wednesday.

The group comprises more than 200 firms - including global clothing giants such as H&M and Zara-owner Inditex - who are signatories to the Accord on Fire and Building Safety in Bangladesh, formed after the Rana Plaza factory collapse in 2013, which killed more than 1,100 people.

The five-year pact was set to expire in May 2018 but its brand signatories agreed last year to extend it to 2021 to complete remaining safety fixes, while the Bangladesh government set up a national regulatory body to take over its work.

A High Court in Bangladesh in May, however, ordered the Accord to shut down by Nov. 30, following a petition filed by a local readymade garments supplier against the pact.

The group's inability to inspect factories through the agreement may prompt brands to cut ties with Bangladeshi suppliers, which would hit the country's economy, which is heavily reliant on garment exports.

"We have submitted an appeal to the Supreme Court...and are working to have a stay issued against the High Court judgement that would close down our office," Rob Wayss, the Accord's executive director told Reuters.

The appeal is likely to be heard on Thursday, a government official said, declining to be named as the information was not public. Shamsuzzaman Bhuiyan, head of the department of factory inspections at the labour ministry declined to comment, saying the matter was before the court.

Low wages have helped Bangladesh build the world's second-largest garment industry, behind China, with some 4,000 factories employing about 4 million workers. The sector exports more than $30 billion worth of clothes a year, mainly to the United States and Europe.

Wayss said the group would move its work to its Amsterdam office if it is forced to shut down in Bangladesh, as the legally-binding contract signed between its brand members extends up to 2021.

However, moving operations out of Bangladesh would likely increase the Accord's costs and also harm suppliers, said Wayss.

"Right now, they can come to the office any day of the week, we can review designs together, we can give them feedback," said Wayss. "Our ability to do that when we don't have an office and infrastructure is reduced, so the industry is harmed."

Bangladeshi Commerce Minister Tofail Ahmed told Reuters last week the Accord was no longer needed as the government's national regulatory body, the Remediation Coordination Cell, was able to do the job.

However, Wayss said that body still has work to do before it is ready to fully police standards in the sector.

"It's in its infancy, they have just hired their staff, they really don't have their systems in place, their engineers need a lot of additional training just like ours did," he said, adding safety fixes at over 500 of the factories the Accord oversees are still incomplete.

(Reporting by Zeba Siddiqui and Ruma Paul; Editing by Euan Rocha and Sam Holmes)