A Giorgio Armani Group-owned firm has been placed into judicial administration by an Italian court after a criminal probe by Milan’s labor inspectorate uncovered evidence that it was indirectly subcontracting production to Chinese-run companies that abused and exploited workers, casting into doubt the extent of its supply chain due diligence and knocking further askew the ethical halo of “Made in Italy.”
Giorgio Armani Operations (GAO), billed as its parent company’s operating and manufacturing arm, was deemed by the Court of Milan as “incapable of preventing and curbing phenomena of labor exploitation within the production cycle” due to its failure to implement “suitable measures to verify the real working conditions or technical capabilities” of its contractors, thereby facilitating the “crime of gangmastering.”
Related Stories
In a ruling that was made public last Friday, the court said that GAO had outsourced the production of its entire 2024 collection of leather bags, belts and accessories to Manifatture Lombarde, a supplier whose inadequate production capacity resulted in the recruitment of four factories owned by Chinese nationals in Bergamo and Milan that lowered costs by “resorting to the use of irregular and clandestine labor in exploitative conditions,” including undocumented Chinese and Pakistani migrants.
The factories subjected its employees to “particularly disadvantageous working conditions,” paying them 2-3 euros (roughly $2-$3) per hour to toil for more than 14 hours a day, sometimes seven days a week. The illegally built dormitories in which workers lived were also unsafe and unsanitary, the court said.
According to investigators, the companies made bags that were sold to Manifatture Lombarde for 93 euros ($99), re-sold to GAO for 250 euros ($266) and then offered for sale by Armani for 1,800 euros ($1,915). The factories have been suspended, fined 80,000 euros ($85,133) and dealt with administrative sanctions of 65,000 euros ($69,170). Their owners will face further investigation for their noncompliance with workplace and employment laws.
While the contract between GAO and Manifatture Lombarde included a code of conduct that banned the use of subcontractors, the company is being placed under receivership for what the court described as “culpably failing to check the production chain and remaining inactive despite being aware of the outsourcing of production by the supplying companies.”
For the next year, GAO will still be allowed to conduct business, albeit under the watchful eye of a court-appointed administrator. Because the purpose of the judicial administration is “not repressive but rather preventative,” with the goal of removing GAO “from criminal infiltration as quickly as possible,” no other charges or fines will be levied, the court said.
“We learn[ed] of the prevention measure decided by the Court of Milan against GA Operations,” a spokesperson from GAO said. “The company has always had control and prevention measures in place to minimize abuses in the supply chain. GA Operations will collaborate with the utmost transparency with the competent bodies to clarify its position on the matter.” Manifatture Lombarde did not respond to a request for comment.
This is the second measure of its kind against a fashion company, the court said, indicating a “need to sit down and discuss with authorities and the operational problems of this market sector, which is so relevant for Italy.”
In January, Alviero Martini was placed under a similar judicial administration, also due to its outsourcing of production to Chinese sweatshops in Milan and other provinces. The court order at the time likewise declared the brand “incapable of preventing and stemming phenomena of labor exploitation within the production cycle.”
There is a “connection between the so-called world of luxury on the one hand and Chinese workshops on the other, with a single objective: cost cutting and profit maximization through the circumvention of labor law,” said prosecutor Paolo Storari, who was involved in both cases.
