LONDON/DHAKA (Reuters) - Tesco, the world's No. 3 retailer, has stopped sourcing clothes from a factory in Bangladesh after discovering serious problems with the safety of the site, the company said on Saturday.
The move follows a survey the British-based supermarket chain conducted in the wake of the collapse of the Rana Plaza factory complex in Dhaka in April that killed 1,129 people.
"A structural survey of a site we source from in Bangladesh, owned by Liberty Fashions, has revealed serious problems with the safety of one of the buildings," Tesco said in a statement.
Mozammel Huq, the owner of Dhaka-based garment maker Liberty Fashion, told Reuters that the building, in an industrial zone near Dhaka, met the required building codes.
"I fully followed the building code, so the question does not arise that it is an unsafe building," Huq told Reuters by phone on Saturday.
"The building is almost new - one phase I built only five years ago and the other one eight years ago."
Tesco, which has promised to conduct structural surveys of all the factories it sources from, said it had stopped using 15 factories of concern in Bangladesh in the past 12 months.
It said it had urged the owners of the Liberty Fashions site to stop all production and to evacuate the premises to ensure the safety of its workers.
"We immediately made the owners aware of our findings, and tried to find an alternative to ceasing production of Tesco products on this site. We are disappointed that this was not possible. We are disappointed that this was not possible ...," it said in its statement.
"Our concerns about the structure of this building are so serious that we decided our only option was to stop taking clothes from this site with immediate effect."
The head of the Bangladesh Garment Manufacturers and Exporters Association (BGMEA), Mohammad Atiqul Islam, told Reuters that after Tesco's decision he had asked Huq to stop production at the factory if it was unsafe.
Huq in response had asked the Bangladesh University of Engineering and Technology (BUET) to inspect the building for safety risk and had agreed to shut the factory if it was found to be unsafe and shift to a safe site, Islam said.
"He told us that they took the issue seriously and had already deposited the required money with the Bangladesh University of Engineering and Technology to examine the level of risk," Islam said.
Huq had put down 172,000 taka ($2,205) for the BUET inspection, Islam said.
Bangladesh has pledged to improve safety in the garment industry after the Rana Plaza collapse but has not pledged any new money to relocate dangerous buildings.
The collapse of Rana Plaza, a factory built on swampy ground outside Dhaka with several illegal floors, on April 24 ranks amongst the world's worst industrial accidents and has galvanized brands to look more closely at their suppliers.
Very low labor costs and, critics say, shortcuts on safety, makes the country of 160 million the cheapest place to make large quantities of clothing.
Companies are split over how to improve conditions. Big European names have signed an accord that would make them legally responsible for safety at Bangladesh factories. U.S. firms like Wal-Mart Stores Inc have broken ties with non-compliant factories.
Reporting by Stephen Addison in London and Serajul Quadir in Dhaka; Editing by Susan Fenton