* Fire at Bangladesh packaging plant killed at least 39
* Government investigates safety lapses
* Factory’s operating licence twice renewed without inspection
* Industrial accidents, Islamist militants dent country’s image
* Foreign firms who use the plant say made regular checks
By Serajul Quadir and Ruma Paul
DHAKA, Oct 13 (Reuters) - Bangladesh’s safety inspectors twice extended an operating licence at a food and cigarette packaging plant in the capital Dhaka without making physical checks.
That breach of rules is now being investigated by the government after a fire at the Tampaco Foils factory killed at least 39 people last month.
The cause of the Sept. 10 blaze, the country’s worst industrial accident since the 2013 Rana Plaza tragedy in which more than 1,100 mostly garment workers died, is unknown. The plant’s owner, a former member of parliament, has gone missing.
Flammable materials stored on the factory floor, a gas leak, excessive use of gas and poorly positioned boilers are all being looked at as possible reasons.
Syed Ahmed, head of the department charged with inspecting factories and commercial buildings, said his inspectors should have visited Tampaco before renewing its licence, but did not, partly because of a shortage of staff.
“If we could have inspected the factory, then we may have noticed and could have taken action on those shortcomings, and this could have averted disaster,” Ahmed told Reuters.
He said the department had launched an internal review to identify who was responsible for signing the documents.
Interviews with Ahmed and more than 20 regulators, investigators, technicians and witnesses involved in the fire at the factory reveal a lack of oversight that the government is scrambling to fix.
While inspections of plants making clothes for global brands have increased significantly since Rana Plaza - many carried out by or on behalf of Western companies - other sectors that also supply international firms have had less attention.
“This disaster has opened our eyes to the fact that we must also focus on other factories,” Ahmed said.
Mikail Shipar, secretary of the Labour and Employment Ministry, said the government was investigating why Tampaco’s licence was renewed without a visit. The operating licence is one of several required, but among the most important.
“There will be a committee from this ministry and action will be taken if anyone is found guilty for this lack of oversight,” he told Reuters.
Plans to expand Ahmed’s department of about 250 inspectors by nearly tenfold have picked up pace since the fire, Shipar added.
The lack of resources is undermining safety for millions of Bangladeshi workers, as well as damaging the south Asian nation’s image among investors.
The $28 billion garment industry is key, accounting for around 15 percent of the economy. More than four fifths of Bangladesh’s exports are to the clothing industry, making it the world’s second largest garment supplier after China.
According to a senior inspection official, the licence at Tampaco, which supplies packaging to local firms and multinationals including British American Tobacco and Nestle, was extended through 2015 and then again until the middle of 2017, both times with no visit.
When asked about the extension of the plant’s operating licence without inspections taking place, a British American Tobacco Bangladesh spokeswoman said the cigarette maker understood them to have been made by independent inspectors as stipulated by the government.
“We understood, as part of our own review process, that all the necessary checks had been made,” she said in an emailed statement, adding that the company had reviewed Tampaco in 2012, 2014 and 2015, and had provided environment and health and safety training, including fire safety, in January, 2016.
“At the time of the last review in October, 2015, British American Tobacco Bangladesh checked all required licences and they were found to be valid.”
BAT Bangladesh also said it was bringing forward on-site reviews of all “priority suppliers” in Bangladesh.
A Nestle spokeswoman said: “When more is known about the cause of this tragedy, we will work with the authorities and other stakeholders to determine how to avoid any such incidents in the future.”
The company said the Tampaco plant had passed a fire safety and prevention audit by independent inspection company SGS in 2012, and Nestle, which conducts audits around every three years, was in the process of organizing the next one.
BANGLADESH‘S IMAGE PROBLEM
There are thousands of big factories and warehouses in Bangladesh, many of them making goods cheaply for multinational companies, with only a few hundred inspectors to check them.
Improving safety is crucial to restoring the country’s image as a place to work and invest.
Beyond industrial safety, Islamist militants have increased attacks. In the worst incident, gunmen killed 22 people in a Dhaka cafe in July, most of them from abroad.
“One of the risks for Bangladesh right now is that between the July terror attack, the legacy of Rana Plaza and now this (Tampaco fire), it begins to look like a non-desirable place to do business,” said Sarah Labowitz, co-head of NYU Stern’s Center for Business and Human Rights.
“The government and industry really need to step up and respond.”
Shipar said the government was preparing to beef up inspections in the non-garment sector.
They would be concentrated in four industrial districts, three of them in or around Dhaka and one in the southeastern port city of Chittagong.
“It is our estimate that roughly 4,000 factories will come under this project,” he said. “We cannot inspect all factories, and so we have to give priority to those factories that are prone to fires or explosions.”
The problem is not only lack of staff.
Coordination between inspection teams is problematic, and the labyrinthine licencing system can cause headaches for company bosses.
“When we ask (for) documents or to implement recommendations ... the management says they struggle with so many licences and do not understand which one should have priority,” said Abdus Sattar, who works in the factory inspection department.
The Tampaco factory is owned by Syed Mokbul Hussain, a former lawmaker.
He told Reuters on the day of the blaze that Tampaco was “fully compliant”, but has not been contactable since to answer questions about the licencing process or other safety issues.
Police said Hussain and nine top managers had gone into hiding since the fire.
Habibur Rahman, a production officer of Tampaco, defended the company’s safety record.
“Why would the owner ignore compliance issues after investing billions of taka?” he said.
Factories are usually notified about inspections first, raising questions about their efficacy.
One government inspector, who asked not to be named, told Reuters during a recent visit to a Dhaka plant that, if he arrived unannounced, more often than not he would be turned away.
Promised reforms will come too late for the 39 people confirmed killed at Tampaco. Several people are missing and dozens more were injured.
Abdul Momin, who survived the explosion and fire early that Saturday morning, was one of several witnesses who said they heard the hiss of gas before the blast rocked the building.
“All of a sudden, I heard a blast,” said Mohammad Manowar Hossain, a long-time Tampaco worker, speaking from hospital recently where he was being treated for two broken legs.
“I lost my senses. After I got my senses back, there were many injured workers lying beside me crying for help.”
Ahmed, head of the inspection team, said Tampaco had been warned in 2014 about raw material storage and that it must ensure the safety of its gas riser - a piping component.
It is not clear whether the recommendations were followed. ($1 = 78.40 Taka)
Additional reporting by Allison Martell in Toronto and Martinne Geller in London; Writing by Euan Rocha; Editing by Mike Collett-White