LEICESTER: A network of clothing manufacturers in Leicester are involved in money laundering and VAT fraud, a BBC investigation has claimed to have found. The companies are based in the city’s garment district where a local MP said such activity was “endemic”.
Some of the firms involved have supplied fast fashion brands, including Boohoo that
told the BBC it would never knowingly conduct business with anyone acting outside of the law. It has now terminated its relationship with one of the firms highlighted by the investigation by BBC Radio 4’s File on 4.
A civil court case involving a dispute between the bosses of two clothing wholesalers first brought the activity to light. Leicester-based company director Rostum Nagra was accused of effectively stealing a firm belonging to a business associate, transferring all the assets to his own company Rocco Fashion Ltd.
He also took over the relationship with its biggest customer – Select Fashion, which has around 170 shops in the UK. The case examined Mr Nagra’s business records noted in a “cash book” he usually carried around with him, which consisted of scraps of paper and handwritten coded notes kept separate from the company’s official accounting system.
The judge in the civil case concluded Mr Nagra had operated a “fraudulent scheme to launder cash for his own benefit” over a “prolonged period” and “very substantial amounts” of money were involved. When confronted by the BBC, Mr Nagra denied involvement in fraud.
Andrew Bridgen, Conservative MP for North West Leicestershire, said it was “absolutely endemic in huge swathes of the city. There are gangs of factory owners going around in brand new four-wheel drives and there are very, very poor exploited workers who are actually living in fear in the city, and you can feel it on the street,” he said.