Prosecutors in Milan are investigating the supply chain of about a dozen fashion brands after a unit of France's LVMH in Italy was placed under judicial management in connection with an investigation into worker exploitation, a source familiar with the matter told Reuters.
A Milan court on Monday appointed a commissioner to run a Dior handbag maker owned by LVMH after an investigation into four of its suppliers around the Italian fashion capital revealed illegal working conditions for staff.
On-site inspections and checks of electricity consumption data led to allegations that workers worked long hours, often late at night and on holidays. Some of the employees slept where they worked, did not have regular contracts, and some had illegally immigrated to Italy.
It is the third such ruling this year by Milan's preventive court, which in April took similar action against a company owned by Giorgio Armani over allegations that the fashion group "culpably failed" to properly supervise its suppliers. The Armani group said at the time that it had always aimed to "minimize abuses in the supply chain".
LVMH declined to comment on the court's decision on Monday.
Milan prosecutors and Italian police are investigating additional small manufacturers that supply about a dozen other brands, but did not provide more details because the information is confidential.
The appointment of a special commissioner is intended to give fashion brands time to resolve issues in their supply chain while continuing to operate.
Neither LVMH nor Armani are under investigation, while suppliers targeted by the investigation face allegations of exploiting workers, according to copies of court rulings seen by Reuters. /BGNES