Loro Piana Hit With Judicial Administration for ‘Fueling’ Worker Exploitation in Italy

A Milan court has placed Italian cashmere purveyor Loro Piana, a twinkling star in LVMH Moët Hennessy Louis Vuitton’s “quiet luxury” firmament,” under a year of judicial administration as it allegedly failed to prevent its subcontractors from exploiting migrant workers in factories where working hours surpassed the legal eight-hour daily minimum and wages undercut accepted thresholds.

The preliminary ruling by the Milan Tribunal marks the fifth time prosecutors have peeled back the hallowed reputations of some of Italy’s most valuable brands to reveal sweatshop-like conditions typically found in more disreputable parts of the global South. Other boldface names that have been implicated in recent years include a Giorgio Armani Group-owned firm, a Christian Dior subsidiary and a Valentino unit.

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According to the ruling, the violations at two Chinese-owned workshops with no actual manufacturing capacity were “negligently fueled by Loro Piana,” which it said chose not to properly verify working conditions in pursuit of greater profits. The court said that the lack of due diligence checks persisted despite the widely reported missteps of Loro Piana’s fellow high-end compatriots and the signing of a non-legally binding memorandum of understanding in May to tackle what appear to be systemic issues in the “made in Italy” supply chain. LVMH, whose supplier code of conduct for suppliers requires that business partners commit to fair pay practices and work hours that do not outpace the legal limit, did not respond to a request for comment.

While the owners of the contracting and subcontracting companies are under investigation by Milan prosecutors for stoking sweatshop-like conditions, Loro Piana itself faces no criminal investigation. In May, military police known as Carabinieri from the Milan labor protection unit arrested a Chinese workshop owner in the northwestern suburbs of Milan after one of his workers accused him of physical assault that caused injuries requiring 45 days of medical treatment. The same worker also demanded 10,000 euros ($11,700) in owed wages.

After investigating further, the Carabinieri found that the factory produced Loro Piana-branded cashmere jackets and that its 10 Chinese employees, among them five undocumented immigrants, were forced to toil up to 90 hours a week, seven days a week, for 4 euros ($4.70) an hour. Italy doesn’t have a national minimum wage, but trade unions consider 7-9 euros ($8-$10.50) to be an adequate benchmark.

The Carabinieri also inspected two intermediary companies and three Chinese workshops, also in the Milan area, identifying 21 workers, of whom 10 lacked proper registration and were working under the table. Instead of appropriate housing, many slept on the production floor or in illegally established rooms inside the workshops.

The owner of an intermediary company told prosecutors that she had, in recent years, been producing 6,000-7,000 jackets per year for Loro Piana at an agreed cost of 118 euros ($138) apiece for orders exceeding 100 items and 128 euros ($149) for those under 100 items. A women’s cashmere-and-silk-blended jacket on the brand’s website retails for more than $4,000. A men’s topper made from the “Gift of Kings” wool, a type of merino, costs $11,500.

The 100-year-old brand has previously come under scrutiny for not fairly compensating Indigenous workers who harvest the rare fur of the vicuña—a wild form of alpaca—in Peru, where prices for the commodity have been steadily falling, according to a Bloomberg investigation last year. Loro Piana has pushed back at what it said was an unfair and inaccurate depiction of its “genuine and longstanding engagement” with the vicuña community.

The Carabinieri said in a statement they have shuttered two of the factories—a third turned out to be a shell company with no production capacity—and imposed a collective fine of more than 240,000 euros ($280,000). LVMH, the world’s largest luxury group, paid 2 billion euros ($2.3 billion) for 80 percent of Loro Piana in 2013. Kendall Roy, a character from the HBO TV series “Succession,” famously paired a $500-plus Loro Piana baseball cap with his custom suits and Gucci sneakers.