DHAKA (Reuters) - The Bangladeshi factory producing clothes for Wal-Mart Stores Inc (WMT.N) before a November fire that killed 112 workers was operating without a safety license and had been warned twice to improve conditions there, an emergency services official said.
"We refused to renew the license because there was a lack of fire safety measures," Abu Nayeem Mohammad Shahidullah, director general of the Fire Service and Civil Defence told Reuters in Dhaka on Monday.
"The fire safety certification expired on June 30, but the department did not renew it because fire safety provisions had not been put in place," he said. He added that in July a reminder had been sent to the management of the factory, which is owned by the garments manufacturer Tuba Group.
An official at Tuba Group declined to comment on the status of the license at the time of the fire.
Mahbubur Rahman, a Fire Service and Civil Defence inspector who visited the utility, said the factory managers "did not respond to our notices and did not pay heed to our suggestions".
After the November 24 blaze at the Tazreen Fashions factory in an industrial suburb of the Bangladeshi capital, both Wal-Mart and Sears Holdings Inc (SHLD.O) admitted that their goods were being manufactured at the workshop even though both had specifically denied it authorization as a supplier.
Wal-Mart, the world's largest retailer, said one of its suppliers - now known to be Success Apparel, a company based in New York City's Garment District - had subcontracted work to the factory without authorization and would no longer be used. Wal-Mart has not confirmed the name of the supplier, but Success has identified itself.
Success, in a statement, said it placed an order with an approved Wal-Mart manufacturer, Simco Bangladesh Limited, and only found out after the fire that the manufacturer had sub-contracted to the parent company of Tazreen Fashions.
"We are saddened by this tragic event and want to clearly state that Success was neither aware of nor in any way has authorized the production of our garments in the factory where this tragedy occurred," the company said. "This factory is not on our matrix and we have never done business with them."
Shahidullah said that although it was strictly illegal for Tazreen to continue production without a safety certificate, the authorities had given it a reasonable period to comply after the certificate expired.
Bangladesh's garment industry, which accounts for 80 percent of the country's $24 billion annual exports, has become the mainstay of an economy that was once dependent on aid.
However, rights groups like the International Labor Rights Forum say that low wages and sub-standard safety conditions remain a problem among many of the country's roughly 3,000 apparel factories because end-buyers squeeze them for rock-bottom production costs.
Shahidullah said an inspection of close to half of the 574 garment factories in the same area as Tazreen Fashions since the blaze had found that 30 percent did not have fire-safety licenses, adequate fire extinguishers, hose pipes, water supplies and workers trained in emergency procedures.
"Action will be taken against those inspectors who issued licenses without verifying the fire safety measures," he said.
Tazreen Fashions was producing clothes for Wal-Mart at the time of the fire because Tuba - which owns several factories - had been sub-contracted by Simco to handle 7 percent of an order of 360,000 pieces.
Simco Chairman Muzaffar Siddique told Reuters that when his company learnt that Tuba Group had diverted that work, 25,000 pieces, from its mother factory - which was certified under a Walmart audit as compliant - to Tazreen Fashions, he sought to have the fabric returned.
Simco received most of it back and was seeking assistance from the Bangladesh Garment Manufacturers and Exporters Association (BGMEA) to get the rest of the work stopped.
A BGMEA vice-president, S.M. Mannan, confirmed that Simco had sought the association's help with the order from Success Apparel, and it had been trying to intervene when the disaster struck.
(This story clarifies the amount of work sub-contracted by Simco, in the 15th to 17th paragraphs)
Additional reporting by Jessica Wohl in Chicago and Adam Kerlin in New York; Writing by John Chalmers and Ben Berkowitz; Editing by Jonathan Thatcher and Michael Perry