$1,200 a Life: Clothing Company Pays Peanuts to Families of Factory Fire Dead

Nov. 26, 2012 — -- A company that makes clothes for Sean Combs' clothing brand ENYCE and other U.S. labels reassured investors that a factory fire that killed 112 people over the weekend would not harm its balance sheet, and also pledged to pay the families of the dead $1,200 per victim.

In an announcement Monday, Li & Fung Ltd., a middleman company that supplies clothes from Bangladesh factories to U.S. brands, said "it wishes to clarify" that the deadly Saturday night blaze at the high-rise Tazreen Fashions factory outside Dhaka "will not have any material impact on the financial performance" of the firm.

The fire broke out on the ground floor of the nine-floor building as hundreds of workers were upstairs on a late-night shift producing fleece jackets and trousers for the holiday rush at American stores, including Wal-Mart, according to labor rights groups. Fire officials said the only way out was down open staircases that fed right into the flames. Some workers died as they jumped from higher floors.

PHOTOS from the factory fire.

After reassuring investors about its financial health, Li & Fung's statement went on to express "deepest condolences" to the families of the dead, and pledge the equivalent of $1,200 to each family. The company also said it would set up an educational fund for the victims' children.

As reported on "ABC World News with Diane Sawyer" earlier this year, Bangladesh has become a favorite of many American retailers, drawn by the cheapest labor in the world, as low as 21 cents an hour, producing clothes in crowded conditions that would be illegal in the U.S. In the past five years, more than 700 Bangladeshi garment workers have died in factory fires.

READ the original ABC News report.

WATCH the original 'World News' report on deadly factories.

"[It's] the cheapest place, the worst conditions, the most dangerous conditions for workers and yet orders continue to pour in," said Scott Nova, executive director of Worker Rights Consortium, an American group working to improve conditions at factories abroad that make clothes for U.S. companies. Nova said the fire was the most deadly in the history of the Bangladesh apparel industry, and "one of the worst in any country."

Today, U.S. companies extended condolences to the families of the victims, and scrambled to answer questions about the dangerous factory that had been making their clothes.

Wal-Mart inspectors had warned last year that "the factory had violations or conditions which were deemed to be high risk," according to a document posted on-line.

Yet Wal-mart clothing continued to be made at the factory, according to workers groups who found clothing with Wal-Mart's private label, Faded Glory, in the burned out remains along with clothing for a number of other U.S. labels, including ENYCE, Dickies and a brand associated with Sears.

Wal-Mart confirmed Monday that its clothes were being made at the Tazreen factory. Even though Wal-Mart is famed for maintaining tight control over its supply chain, the company said its clothes were being made at the plant without its knowledge.

"Compliance and safety are important to us," said Jeffrey Tweedy, president of Enyce, "and we expect all our licensees to have in place compliant standards for fire and safety conditions at any factory that may produce our brand."

Labor activists also said they found garments with the Dickies label in the factory, and provided photos. Dickies said in a statement that the company's "thoughts and prayers" were those affected by the fire, but that the company had concluded its production schedule "with this vendor earlier this year."

The statement also said that "it is standard operating procedure at Williamson-Dickie to ensure the global vendors and suppliers we work with provide a safe work environment in accordance with all applicable laws and fair labor practices."

ABC News reached out to Li & Fung's New York office for comment, but messages left Monday were not returned.

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