Try adding white vinegar to the laundry when washing the towels. Or, a whole box of baking soda when washing the towels. Definitely, make sure the towels dry out before adding to the pile of laundry.
If the towel issue doesn't solve the problem, I agree with the above post.
It could be that his towels aren't getting dry. Ask to smell a freshly laundered towel (one that hasn't been used) and see if it smells. Mildew odors are hard to remove from towels and are caused by lack of bathroom ventilation and then the dryer not getting the towel completely dry after it's washed. It could be that he dries his face with a mildew-y towel and the smell lingers on him making it seem like it's his breath? If this doesn't answer it, he might want to go to the doctor. Certain body odors can be a sign of illness.
Does he use the same towel over and over again? the problem with water is that it does get mildew when stagnant. If he doesn't wash his towel and doesn't have an open bathroom window to airdry his towel he might just have mildew on the towel and spreads it to his body.
My old apartment didn't have a bathroom window and I would use my towel once and when I would go to use it again it would smell like mildew and when i would touch it it would smell like mildew on my hands.
Try circulating towels. maybe that would help?