Rana disaster: how far can we proceed with CSR?

Published date03 October 2016
Date03 October 2016
AuthorAfroza Begum,S.M. Solaiman
Subject MatterAccounting & Finance,Financial risk/company failure,Financial crime
Rana disaster: how far can we
proceed with CSR?
Afroza Begum and S.M. Solaiman
School of Law, University of Wollongong, Wollongong, Australia
Purpose – This paper aims to investigate corporate social responsibility (CSR) in corporate business
and stimulate a debate on this to combat the modern day slavery in Garment Industries (GIS) in
Design/methodology/approach This research has drawn on media, non-governmental
organisations and a series of national and international reports and on relevant materials from both
primary and secondary legal resources.
Findings – The existing phenomena in Bangladesh surrounding Rana Plaza (RP) disaster stand in
sharp contrast with CSR which inevitably offend the dignity and core values of human beings as deeply
entrenched in a range of national and international instruments. RP disaster was a man-made
catastrophe that could have been surely averted had the three actors (such as RP, the government and
the foreign buyers being multinational corporations) performed their respective obligations in due
Research limitations/implications – CSR is still an intensely debated issue, especially in terms of
its scope and limitation. This study has not delved into these issues.
Practical implications – There has been a dearth of intellectual inquiries (to the best of the authors’
knowledge) about CSR in GIS in Bangladesh. It is submitted that this paper will contribute to lling the
gap in the legal literature, especially in relation to the responsibilities of the three actors, and to contest
another human catastrophe in the future.
Social implications – In particular, it is expected that the ndings would play an important role in
empowering relevant stakeholders including the impoverished workers who have been the most
disadvantaged, and overlooked by the three actors.
Originality/value – This paper is the original work of the authors and has not been submitted
elsewhere for publication.
Keywords Bangladesh, CSR, Garment-industry, Revisiting corporate culture
Paper type Viewpoint
1. Introduction
The Rana Plaza (RP) – an eight-storey building owned by Sohel Rana – was erected in
Dhaka, collapsed on 24 April 2013, killing 1,135 ill-fated workers, critically injuring
2,500 others and leaving hundreds more disabled (The Hindu, 2014). RP housed a bank,
apartments, several shops and a total of ve Garment Industries (GIS) which
manufacture apparel for famous brands including Wal-Mart, Primark, Joe Fresh,
Matalan, Cato Fashions and Bonmarche. Based on the media reports a day before the
incident that fatal cracks were found in RP, the bank and other shops were immediately
closed but RP remained open; workers were ordered to continue the work on the
following day with the threat of re and salary cut, and RP collapsed during the early
rush hours (Gomes, 2013). A series of issues emerged from this tragic incident include:
whether GIS (RP), the government or the foreign buyers being multinational
The current issue and full text archive of this journal is available on Emerald Insight at:
Journalof Financial Crime
Vol.23 No. 4, 2016
©Emerald Group Publishing Limited
DOI 10.1108/JFC-03-2015-0013
corporations (MNCs) should be held responsible for the deaths of those workers and
gross human rights abuses; whether the authorities concerned including the
government, the auditors and the Bangladesh Garment Manufacturers and Exporters
Association played least of their respective roles; whether corporate social
responsibility (CSR) exists in any form in corporate practices in Bangladesh; whether RP
discharged its mandatory legal obligations, let alone ethical or philanthropic duties to
avoid the disaster; whether the products of MNCs are sourced ethically and to what
extent they should be liable for their supply chain. This paper aims to examine CSR in
Bangladesh by addressing some of those issues, especially CSR performed by RP and
MNCs, and the government’s responsibility as well as to stimulate a debate on this to
combat another human catastrophe in the future. The discussion begins with a brief
exploration of GIS practices with a specic focus on RP incident.
2. GIS practices in Bangladesh
The GIS are the leading export industries in Bangladesh currently contributing 76
per cent to foreign earnings, which is up from 12.5 per cent since 1984/1985 (Nasrullah
and Rahim, 2014;Shefali, 2002;Hossain and Rahman, 1995) and made up three-quarters
of the country’s gross domestic product. Cheap labour is believed to have had an
immense inuence on this growth (Nielsen, 2005, p. 566; The Economist, 2014;
Ain-O-Salish Kendra and UNDP, 1997), enabling Bangladesh to become the world’s
second-largest exporter of clothing after China. The industry is now worth $20 billion a
year, and has expanded to nearly double the size it was in 2011 (StorySouthAsia, 2014).
Yet this gain is overshadowed by the exploitative practices of the GIS. The practices
distinctly display almost a total deviation from laws, and demonstrate multiple human
rights abuses ranging from low wages[1] to poor working conditions and Occupational
Health and Safety (OHS) standards. These violations are widespread in all stages of
operations of the GIS.
With regard to wages and payment, the government of Bangladesh declared a
monthly minimum wage of 3,000 takas (US$ 38), “which is less than a fth” of China’s
current rate (The Economist, 2014). With this nominal income, it is extremely difcult to
live for 30 days in the capital city (most of the GIS are located in Dhaka) where the cost
of living is very high. Nevertheless, the payment provided by the GIS very often does not
comply with that xed rate and is irregular (Kumara, 2014). Unscheduled work without
payment, physical assault, sexual harassment, discrimination in wages, absence of
materiality and weekly leave, unauthorised sub-contracting, poor ventilations and
inadequate re exists are a few to name rampant in GIS (Begum, 2012). The
globalisation of trade promotes privatisation and export competitiveness in which
employers search for higher productivity while expending less. In this process of prot
maximisation, poor workers, especially women, are the worst victims, even though it
generates some benets for them in a sense that they might not have had any other job
to earn their living. The less skilled and uneducated people, particularly the city-bound
rural migrants, are forced to accept any conditions of employment due to their
vulnerable socio-economic condition (Khan, 2001). GIS exploit this vulnerability of
ignorant and innocent workers. This vulnerability has been ruthlessly exposed in the
RP debacle, when the owner of RP refused to close the building in deance of repeated
danger warnings by saying that “[there] is nothing serious”; workers were reminded
that “the end of the month – and their paychecks – was near” which indicates, “if you
Rana disaster

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