Italian prosecutors have placed luxury group Tod's and three of its executives under investigation for suspected labor abuses and are seeking a temporary blanket ban on company advertising, judicial documents showed on Thursday.
It is the first time an Italian fashion house and its managers have been directly targeted over alleged labor exploitation, following a series of cases that have tarnished the reputation of some of the industry's biggest names, Reuters reported.
Tod's, known for loafers and other high-end leather goods, said in a statement it was calmly reviewing the allegations.
Until now, Milan prosecutors had concentrated on Chinese-owned workshops to which brands outsourced production, placing five high-end fashion firms under temporary judicial administration without opening criminal probes against them.
In an unprecedented move, Milan prosecutors allege Tod's was fully aware of and complicit in labor exploitation at subcontracted workshops, saying third-party audits over several years flagged problems but that these were ignored.
The allegation is contained in a 144-page document, seen by Reuters, which called for punitive action in the form of a six-month ban on Tod's advertising for luxury goods. The document alleges that workers were exploited with the active knowledge of the company in two Chinese-owned workshops in the Milan area, and in three Chinese-owned factories in Marche, the central region where Tod's is headquartered.
A Milan judge has set a hearing for December 3, at which company representatives may be questioned or file written submissions in their defense.
The investigation marks an escalation from an ongoing case announced last month, in which Milan prosecutors sought judicial administration for Tod's, mirroring measures already applied to the other five fashion labels.
The issue is at the center of a battle over jurisdiction, with two separate courts in Milan saying in the past months that the judicial administration request was well founded, but should be handled by judges in the Marche region.
Milan prosecutors challenged those rulings, but their appeal before Italy's top court, the Cassazione, was rejected on Wednesday, Tod's said in its statement. It is not yet clear what impact the Cassazione's decision may have on the new chapter of the probe.
After Reuters broke the news of the case last month, Tod's founder Diego Della Valle defended the company's conduct and warned that the reputation of the "Made-in-Italy" label risked being eroded by the supply chain probes. Diego Della Valle is not among the three Tod's executives under investigation, according to judicial documents.
L Catterton, a private equity firm backed by French luxury group LVMH, took Tod's private last year in agreement with the group's main shareholder, the Della Valle family.
