Italian police said that exploited Chinese workers hired in Italy by an unauthorized subcontractor sewed bags and accessories for fashion house Giorgio Armani in a series of supply chain abuses that the in-house manufacturing company failed to properly control.
The fashion house denies wrongdoing by GA Operations, which manufactures apparel, accessories and home décor for Giorgio Armani Group brands.
"The company has always implemented control and prevention measures to minimise supply chain abuse," Armani said in the statement.
"GA Operations will collaborate with the utmost transparency with the competent authorities to clarify its position on this matter."
According to police, GA Operations hired a subcontractor, who in turn hired unauthorized Chinese subcontractors who employed under-the-table workers, some of whom were in Italy illegally.
It is alleged that they failed to comply with health and safety rules and rules governing working hours, breaks and holidays.
The police allege that this is part of a system of caporalato, the illegal brokering and exploitation of workers most commonly associated with the agricultural sector. Four Chinese factory owners are being separately criminally investigated for their role.
Meanwhile, GA Operations has not been investigated but has been placed under judicial administration for up to a year as part of a procedure to ensure legal operations, said Carabinieri Lt. Col. Loris Baldassari.
The scheme released by the police shows that the Chinese contractor was paid €93 for a bag that the fashion house sold for about €1,800.
The authorised sub-contractor, who acted as a middleman but had no real production capabilities, was paid €250 for the same bag, taking home €157 for each bag, police said. / BGNES