Italian fashion house Loro Piana, owned by French giant LVMH, has been placed under court administration for allegedly facilitating the exploitation of workers by subcontractors.
In a statement, the carabinieri police said the company had been deemed “incapable of preventing or curbing labour exploitation within the production cycle by failing to implement adequate measures to verify the actual working conditions or the technical capacities of its contractors”.
An investigation found the fashion house entrusted the production of its clothing, including cashmere jackets, to a company without production facilities.
That firm outsourced the work to another company, which in turn used workshops in Italy employing Chinese workers to save costs, the statement said.
In these workshops, irregular workers were exploited without respecting health and safety rules, particularly regarding wages, working hours, breaks and holidays, investigators found.
The judges of the Milan court found that Loro Piana “negligently facilitated” the exploitation, according to the police statement.
The court however stressed that the one-year administration was intended as “preventative”, not a punishment, according to the court document seen by AFP.
It was aimed at “combating the unlawful contamination of healthy businesses by subjecting them to judicial oversight” where they can be removed from “criminal infiltration”.
In a statement, Loro Piana said it had terminated ties with its supplier within 24 hours of discovering the existence of its subcontractors on May 20, and was fully cooperating with authorities.
“Loro Piana strongly condemns any illegal practices and reaffirms its ongoing commitment to protecting human rights and complying with all applicable regulations throughout its entire supply chain,” it said.
The investigation began in May following a complaint from a Chinese worker who claimed he was beaten by his boss after demanding payment of back wages, police said.
The police carried out inspections in factories run by Chinese citizens in the area surrounding Milan, finding violations of workplace rules as well as illegally built dormitories and unsanitary conditions.
Proceedings were brought against two Chinese nationals who owned workshops, two Italians for violations of workplace health and safety standards, and seven workers without residence permits.
The court also imposed fines totalling over 181,000 euros ($211,000) and administrative penalties of around 60,000 euros.
The operations of two Chinese workshops were also suspended “for serious safety violations and the use of undeclared labour”, the police statement said.
Loro Piana was acquired by LVMH in 2013, and is currently led by Frederic Arnault, son of LVMH chairman Bernard Arnault.
The company did not comment on the proceedings in Milan.
The Italian justice system has already carried out similar proceedings against other fashion houses including Armani.
In May, the Italian competition authority cleared luxury brand Dior — also owned by LVMH — of violations in working conditions but required it to pay a two-million-euro fine towards “victims of exploitation”.
