Wal-Mart (WMT), Sears (SHLD) Face Pressure To Pay Tazreen Fire Victims Post Rana Plaza

The Rana Plaza disaster in Bangladesh has reverberated throughout the garment industry as the death toll passed 800 on Wednesday and officials in the capital city of Dhaka shuttered 18 plants for safety violations.

But as two of the Western clothiers that sold clothes stitched in the now-crumbled factory rushed to compensate victims and their families, pressure continues to mount on Wal-Mart Stores, Inc. (NYSE:WMT), the world's largest retailer, and Sears Holdings Corp. (Nasdaq:SHLC) to shell out for the 112 killed in a similar Bangladeshi accident six months ago.

Last month, the two big-box retailers refused to follow Li & Fung Ltd. (HKG:0494) as the Hong Kong trading company offered to pay victims of the Nov. 24 fire at the Tazreen Design Ltd. factory, located on the outskirts of Dhaka.

And both corporations ignored an invitation to an April meeting in Geneva, where companies that purchased clothing made in the Tazreen plant discussed compensation plans, though labor advocates said nothing came of the conference.

“At the time of the Tazreen tragedy, Sears had not authorized use of the Tazreen factory for production of our product. Sears immediately terminated the vendor, who failed to register this factory with Sears, as required by our policies," Howard Riefs, a spokesman for Sears, said. "We remain committed to factory safety and are working with our factories, vendors and industry groups on how best to address this important global issue."

Wal-Mart said it committed $1.6 million to found a program to teach Bangladeshis techniques to prevent and escape fires.

But advocates said the so-called Environmental Health and Safety academy is a cheap and ineffective alternative to remunerating workers and funding initiatives to inspect and repair other factories.

“We’ve seen no tangible benefits for workers from that [program],” said Theresa Haas, a spokeswoman for the Washington, D.C., Workers Rights Consortium. “The amount of money that Wal-Mart even committed is well below the amount that is needed.”

Li & Fung did not respond to queries about the amount offered to victims of the Tazreen fire.

The role of Wal-Mart, the largest buyer of Bangladesh’s cheaply made apparel, in the Tazreen tragedy appears both indirect and incidental. The Arkansas retailer ordered 300,000 girls’ shorts to be shipped in less than two months, according to a December report in the Wall Street Journal. But unable to meet that demand, the manufacturer, Simco Bangladesh Ltd., subcontracted to Tazreen without Wal-Mart’s consent and against its policies.

“If we learn of any unauthorized production, we will take appropriate action based upon our zero-tolerance policy on unauthorized subcontract,” Megan Murphy, a Wal-Mart spokeswoman, said weeks after the Rana Plaza disaster. She was asked whether Wal-Mart had contracted work to the crumbled factory. “We remain committed to promoting stronger safety measures in factories, and that work continues.”

In Bangladesh, the collapse of the eight-story Rana Plaza plant, which began showing cracks before crumbling into itself two weeks ago apparently due to shoddy construction atop a filled-in pond, has fueled a greater call for reform and safety in the world’s largest clothing manufacturer after China.

Days after Bangladesh promised the United Nation’s International Labor Organization to give safety “the highest consideration,” officials shut down 16 factories in Dhaka and two in Chittagong, textile minister Abdul Latif Siddique said, according to AFP.