Italian cashmere house Loro Piana, famed for its “quiet luxury” brand under the LVMH empire, has been placed under court monitoring over alleged labor abuses in its supply chain involving unauthorized Chinese-run factories using illegal and underpaid workers.
An investigation revealed that Loro Piana had allegedly subcontracted production to a shell company that further outsourced work to reduce costs. The shell company allegedly issued fake invoices and engaged in exploitative labor practices, Reuters reported, adding that the brand will now undergo court monitoring for one year as a result.
The Milan court’s ruling on Monday reportedly makes Loro Piana the fifth high-end brand in Italy to face judicial oversight in a widening crackdown on worker exploitation in the fashion industry.
Fashion brands including Valentino, Armani, LVMH’s second-largest brand Dior and Italian handbag company Alviero Martini were previously placed under administration for similar issues, Reuters added.
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Without naming Loro Piana directly, Italy’s paramilitary Carabinieri police said in a statement Monday that its labor protection unit had executed a “judicial administration” order against a company operating in the high-fashion sector.
“It was determined that the fashion house outsources the production of clothing items (including cashmere jackets) to a company with no production capacity, which then outsources the production process to another company, which, in turn, outsources production to Chinese factories to reduce costs,” the Carabinieri Command for the Protection of Labor said in a press release.
The agency added that these factories slashed expenses by hiring undocumented workers, often under unsafe and unfair conditions — paying low wages, ignoring safety regulations and violating labor laws on working hours, breaks and time off.
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Loro Piana said Tuesday in a statement to FOX Business that a supplier subcontracted work without informing the company, breaching legal and contractual obligations. The company said it learned of the issue on May 20 and “terminated all relations with the concerned supplier in less than 24 hours.”
“Loro Piana acknowledges the notification received from the Court of Milan’s Preventive Measure Section today regarding labor practices by undisclosed and unauthorized subcontractors of one of its suppliers,” the company said.
“Loro Piana firmly condemns any illegal practices and reaffirms its unwavering commitment to upholding human rights and compliance with all applicable regulations throughout its supply chain,” it added. “Loro Piana is committed to ensuring that all its suppliers comply with the Maison’s highest quality and ethical standards in line with its Code of Conduct. In this perspective, Loro Piana has been constantly reviewing and will continue to strengthen its control and audit activities.”
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The investigation into the luxury powerhouse began in May after a Chinese worker reported being physically assaulted by his employer after demanding roughly $11,700 in unpaid wages, according to Reuters.
The employer allegedly beat the laborer and caused injuries that required 45 days of treatment. As a result, the Carabinieri police arrested the Chinese workshop owner and closed his factory in the northwestern suburbs of Milan, the outlet said.
| Ticker | Security | Last | Change | Change % |
|---|---|---|---|---|
| LVMUY | LVMH MOËT HENNESSY LOUIS VUITTON SE | 110.81 | -1.32 | -1.18% |
Carabinieri police found that the workshop produced Loro Piana-branded cashmere jackets and that its laborers were forced to work up to 90 hours a week, seven days a week, for roughly $4 an hour, Reuters reported. Police said the workers also slept in makeshift rooms illegally built inside the factory, the outlet added.
Carabinieri police said inspections at several factories in the Milan area ultimately found 21 unidentified Chinese workers, 10 of whom were employed illegally and seven of whom were undocumented immigrants in Italy.
Reuters contributed to this report.
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