Polish Retailer LPP Faces Blacklist Threat Over $40 Million Unpaid Bills
Bangladeshi garment factories face a big problem. They are owed almost $40 million. This money is for goods supplied to a Russian buyer. The Bangladesh Knitwear Manufacturers and Exporters Association (BKMEA) is now taking a strong stand. It may blacklist Polish retailer LPP. This will happen if LPP does not pay money owed to Bangladeshi suppliers. BKMEA also warned of taking complaints against LPP to international groups. These include the European Union.
LPP has already stopped placing new orders in Bangladesh. The Polish company also paused new product development. LPP made this decision because of a payment dispute. Russian buyer FES Retail owes Bangladeshi garment factories almost $40 million. Bangladeshi companies supplied clothes to FES Retail. LPP had guaranteed these payments.
The factories tried to get their money back. They then filed lawsuits. Last month, LPP officials met with BKMEA and BGBA leaders online. BGBA is the Bangladesh Garment Buying House Association. LPP said it would pay only if the lawsuits were stopped. BKMEA and BGBA leaders did not agree. No solution was found.
LPP sent a letter on July 21. It told BKMEA, BGBA, and the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) that it was not responsible for the payments. LPP said it only helped in talks. The company also said it would buy fewer goods from Bangladesh over time. It might change its mind if things get better.
On July 30, LPP wrote to suppliers again. It said new orders and product work would stop. This will continue until it reviews its buying plans in Bangladesh. LPP will also look at buying goods from other countries.
Mr. Abdul Hamid is the President of BGBA. He said his group’s members are owed $4.5 million. This makes the total almost $40 million. He explained that LPP had problems in Russia after the war. LPP then introduced FES Retail to Bangladeshi suppliers. LPP’s office sent out purchase orders. These orders were in FES Retail’s name. LPP also guaranteed the payments. But now, LPP says it has no link to FES Retail.
Mr. Hamid added that LPP buys about $800 million worth of clothes from Bangladesh each year. He wants LPP to keep buying from Bangladesh. But he believes LPP is trying to avoid paying the debt. LPP offered to pay only half the amount. This offer came through FES Retail. Mr. Hamid said a 10-15 percent discount could be discussed. Most of the money, 75 percent, is owed to banks.
Ensa Clothing is a buying house. It sent trousers worth $52,000 to FES Retail last April. The goods arrived at a Russian port two months later. FES Retail did not pay for them. So, the goods were stuck. Ensa Clothing tried to get its money from LPP. It then filed a lawsuit in the Bangladesh High Court last month.
Mr. Enamul Kabir is the Managing Director of Ensa Clothing. He said LPP paid for shipments in April and May. This shows LPP had a link to FES Retail even after April. He fears his factory might close if the payment is not received.
BKMEA held a board meeting on Saturday. It again decided to blacklist LPP if the debt is not paid. BKMEA President Mohammad Hatem confirmed this. He said LPP is threatening to stop doing business in Bangladesh. If LPP does not pay, BKMEA will tell the EU. It will also tell other international groups. They will accuse LPP of bad business practices.
