Prosecutors in Milan, Italy are investigating the supply chains of a dozen fashion brands, following allegations of worker exploitation, Reuters has reported.
In June 2024 a Milan court appointed a commissioner to oversee an LVMH [Moët Hennessy Louis Vuitton] subsidiary that produces Dior handbags after illegal working conditions were discovered at four of its suppliers.
Inspections at the suppliers revealed that workers were subjected to extended working hours, often into the night and on holidays, with some sleeping at their workplace without proper contracts.
The investigation into these suppliers, which also uncovered instances of illegal immigration, is part of a broader effort by Milan prosecutors and Italian police to scrutinise small manufacturers supplying around a dozen other brands.
Details of the brands remain confidential due to the ongoing investigation.
This is the third time in 2024 that the Milan court has taken pre-emptive measures against companies for failing to oversee their supply chains adequately.
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By GlobalDataIn April, similar action was taken against a company owned by Giorgio Armani. The Armani Group responded that it always seeks to minimise abuses in its supply chain.
Neither LVMH nor Armani are under investigation themselves, but their suppliers face serious accusations of worker exploitation, according to court decisions seen by Reuters.
LVMH declined to comment on the court’s decision.
The appointment of a special commissioner allows the brands’ subsidiaries to address and rectify supply chain issues while maintaining operations.
Since 2014, Milan prosecutors have been probing recruitment firms for illegal employment practices, tax evasion and the avoidance of welfare and pension contributions.
The probe has shifted to the fashion industry, uncovering comparable issues from the initial focus on logistics, transportation and cleaning services.
A recent case revealed that a small manufacturer charged Dior €53 ($55) to produce a handbag that retailed for €2,600.
Under Italian law, brands are responsible for conducting thorough checks on their outsourced production suppliers.
Only suppliers mistreating workers were previously targeted by Italian magistrates, but Milan prosecutors are now using a legal provision designed to combat companies infiltrated by organised crime, placing them under judicial administration through appointed commissioners.