Two years ago, Italian prosecutors initiated a series of investigations that have since sent seismic waves through the global luxury fashion industry. What began as an inquiry into worker exploitation within factories allegedly supplying prominent fashion houses has systematically exposed deep-seated vulnerabilities within the esteemed "Made in Italy" supply chain. This unfolding narrative challenges the long-held perception of Italian luxury as a bastion of superior quality and ethical production, and critically, disproves the assumption that worker exploitation is a phenomenon confined to the fast-fashion sector. The investigations have expanded significantly, implicating a growing number of high-profile brands and revealing a complex web of subcontracting and labor practices that undermine the very foundations of luxury manufacturing.
The Genesis of the Investigation and Initial Revelations
The initial phase of the probe, launched approximately two years prior to the latest announcements, zeroed in on five brands: Dior, Giorgio Armani, Loro Piana, Valentino, and the mass-market Italian brand Alviero Martini. These brands found themselves facing accusations that their downstream suppliers were engaged in exploitative labor practices. While these initial cases have since been closed, with courts satisfied that necessary corrective measures were implemented, the shockwaves they generated were palpable. However, prosecutors did not cease their efforts; the investigation has since broadened considerably, now encompassing an additional 22 brands.
The latest wave of scrutiny, announced in the preceding week, has brought prominent names such as Chanel, Moncler, Bvlgari, and Brunello Cucinelli under the investigative spotlight. It is crucial to note that none of these brands have been placed under court administration or directly accused of wrongdoing at this juncture. Instead, prosecutors have formally requested that these companies furnish governance documentation to aid in their ongoing investigations into subcontractors. In response, all brands that have commented on the matter have emphasized their full cooperation with the authorities and highlighted the existence of internal mechanisms designed to identify and eradicate unethical practices within their supply chains.
A Deep Dive into the Allegations: Forced Labor and Subcontracting
The investigations were initiated with a focus on the most egregious allegations, drawing upon Italy’s Anti-Mafia Code, the national legal framework established to combat organized crime. Court documents from various cases have detailed evidence of forced labor and the illicit subcontracting of excess production to Chinese-owned factories operating under exploitative conditions. Numerous such facilities have been found to be in violation of health and safety regulations and employment laws. In response to these findings, the implicated brands moved swiftly to disassociate themselves from the incriminated suppliers and to reinforce their supply chain oversight.
A significant development occurred in December 2025, when the second phase of the investigation named a further 13 brands. This phase focused on relationships with suppliers Bag Group, Effellemoda, and New Leather. The brands implicated in this round included Prada, Gucci, Versace, Dolce & Gabbana, Missoni, Ferragamo, Saint Laurent, Givenchy, Pinko, Coccinelle, the Italian subsidiary of Alexander McQueen, the Italian operating company for Off-White, and Adidas. The allegations in this phase also primarily concerned the exploitation of workers, predominantly of Chinese ethnicity, by these suppliers. In each of these instances, the involved brands were mandated to provide additional documentation to the court, and these investigations remain active.
The most recent allegations have expanded to encompass subcontractors responsible for manufacturing luxury packaging, including garment bags, dust bags, shopping bags, and pouches. Recent inspections at Milanese manufacturer Moda Fashion Styles and Varese-based subcontractor Isacco revealed a disturbing pattern: employees of Chinese ethnicity working under exploitative conditions. As these investigations continue to draw more luxury brands into their scope, a comprehensive understanding of the uncovered issues and the necessary steps for brands is becoming increasingly critical.
Systemic Issues Uncovered: Subcontracting and the "Chitalia" Phenomenon
The impetus for these probes was partly driven by mounting pressure on Italian companies to comply with impending European Union regulations concerning supply chain traceability and due diligence. Italy, with its significant role in global fashion exports and notoriously complex, often opaque supply chains, presented a clear starting point for such scrutiny.
The investigations have brought to light several systemic issues plaguing the industry. Firstly, the pervasive practice of subcontracting, where primary orders are outsourced to smaller, less scrutinized entities, has been a central focus. While regulatory drives for supply chain transparency have prompted some brands to streamline their supplier networks and tighten controls over subcontracting, a significant number still lack adequate oversight in this area.
Secondly, the issue of forced labor, particularly within the Italian context, is a complex and deeply entrenched problem. Prosecutors have been working to dismantle the "caporalato" system, a form of illicit gangmastering. Andrea Sianesi, a professor of operations and supply chain management at Politecnico di Milano and a member of a taskforce that has collaborated with prosecutors, explained that this system has historically recruited undocumented laborers, withheld portions of their wages, and subjected them to exploitative conditions. Roya Derakhshan, a lecturer at UCL whose research focuses on marginalized stakeholders, emphasized that undocumented immigrants are particularly vulnerable to this exploitative network.
Within the Italian fashion supply chain, a significant proportion of these concerns revolve around Chinese immigrants. Many of these individuals work in Chinese-owned factories that operate across Italy, commonly referred to as "Chitalia" factories. This phenomenon gained traction in the late 20th century as globalization facilitated access to cheaper labor and more industrialized factories capable of meeting production targets faster and more economically than domestic counterparts. Concurrently, many Italian factory owners, facing a lack of interest from their children in taking over family businesses, found that the influx of Chinese entrepreneurs seeking to purchase pre-existing factories represented a mutually beneficial arrangement, according to Dr. Hakan Karaosman, an associate professor at Politecnico di Milano.
While many Chitalia factories adhere to local legislation, the ongoing investigations have revealed instances where rules have been bent or broken. These factories have consistently played a prominent role in every phase of the investigation thus far.
Brands implicated in the second phase largely declined to comment. However, Adidas issued a statement clarifying that the investigation was not directly targeting the brand itself, but rather a subcontractor. "Adidas itself is not subject of the investigation. Neither we nor our Italian suppliers have any business relationship with the company under investigation," a spokesperson stated. "We are cooperating fully with the Italian authorities and supporting their investigation." Similarly, Coccinelle affirmed its commitment to gathering requested documentation and reiterated its dedication to ensuring legal compliance and the highest ethical standards across its operations and supply chain through its monitoring systems.
The investigations have largely proceeded on the assumption that brands were unaware of the exploitative practices occurring at subcontractors beyond their direct purview. However, one notable allegation challenged this narrative. In October 2025, the prosecutor leading the probe, Paolo Storari, sought a six-month advertising ban for Tod’s, alleging that the brand knowingly benefited from illicit subcontractors who generated "huge profits by exploiting heavily underpaid Chinese laborers." Three senior executives were also under investigation alongside the company, under corporate liability legislation. The hearing for this case was subsequently postponed. Should Tod’s demonstrate significant progress in rectifying these practices, the ban request may be withdrawn. Tod’s had previously denied the allegations and has not provided further updates.
Subcontracting’s Pervasive Reach and Limited Oversight
The most recent probe, focusing on the manufacturing of luxury packaging, underscores the pervasive nature of exploitation across all segments of the fashion supply chain, extending even to the production of seemingly minor items like dust bags.
Official documents reviewed by Vogue Business indicate that Moda Fashion Styles employed undeclared workers lacking residency permits, operated machinery without necessary safety mechanisms, and housed employees in degrading living conditions. Electricity consumption records suggested continuous production throughout the day, including public holidays. Furthermore, labels indicating "Made in Albania" were discovered on-site. While Moda Fashion Styles does not maintain direct relationships with the brands involved, prosecutors found evidence that their products, primarily luxury packaging such as garment bags, dust bags, shopping bags, and pouches, were manufactured at the facility.
Significantly, prosecutors unearthed invoices for this work issued by Brandart, a company that does have direct relationships with Owenscorp Italia (the parent company of Rick Owens), Chanel, Brunello Cucinelli, Goyard Italie, and Moncler. In a statement, Brandart confirmed its cooperation with authorities and its commitment to monitoring and overseeing its supply chain in accordance with the highest compliance standards.
Chanel stated that it had been alerted to the claims and had instructed its supplier, Brandart, to terminate its relationship with Moda Fashion Styles "with immediate effect." The brand emphasized its commitment to fully cooperating with Italian authorities and its rigorous system of supply chain assessments, audits, and controls, upholding the highest standards of social and environmental responsibility.
A subsequent inspection on June 25 at Isacco, a subcontractor in Varese, revealed similar issues: undeclared workers without residency permits, inadequate safety mechanisms on machinery, and piecework payment systems that clearly violated collective labor agreements. Invoices indicated that Isacco was working on behalf of packaging manufacturer F. VL., which in turn held manufacturing contracts with Stefano Ricci, Bvlgari, Goyard Italie, Jacob Cohën, Brunello Cucinelli, and Etro. Jennifer Tommasi Bardelle, owner and creative director of Jacob Cohën, issued a personal statement affirming the brand’s unwavering support for workers’ dignity. She clarified that the exploitation occurred at a "third-party subsupplier," unknown to Jacob Cohën, and stated the brand would pursue all responsible entities accordingly.
A spokesperson for Brunello Cucinelli expressed surprise and sadness regarding the alleged exploitation. The brand indicated that its due diligence and compliance checks had not revealed any critical issues. Founder Brunello Cucinelli’s known advocacy for vertical integration and "humanistic capitalism" was highlighted, with the brand assuring its "immediate and unwavering commitment to safeguarding the honor and integrity of ‘Made in Italy’." They also emphasized that the implicated supplier was entirely separate from their network of 400 manufacturing partners employing 9,000 individuals with whom they maintain direct and long-standing relationships. Several other implicated brands, including Owenscorp, Moncler, F. VL., Stefano Ricci, Bvlgari, and Goyard Italie, did not respond to requests for comment, while Etro declined to comment.
It is important to reiterate that Italian prosecutors have not placed any of these brands under court administration. Their request for additional documentation, specifically audits of direct suppliers dating back two years, aims to ascertain the brands’ awareness of any wrongdoing.
Navigating the Future: Solutions and Systemic Challenges
In May 2025, the Prefecture of Milan proposed a voluntary agreement, the Memorandum of Understanding for the Legality of Procurement Contracts in the Fashion Production Chains. This initiative invites brands and suppliers to submit supply chain data to a central database, intended to generate a "green list" of approved suppliers. However, sustainability experts offered a lukewarm reception, arguing that genuine change necessitates mandatory protocols rather than another certification scheme, especially given that suppliers are already inundated with data requests related to incoming regulations.
Italy’s Minister of Enterprise and Made in Italy, Adolfo Urso, had envisioned more stringent measures, including revising the Small and Medium Enterprises (SME) bill to incorporate specific provisions for the fashion industry. However, this initiative reportedly faced a veto from the Lower House of Italy’s Parliament in December. Similarly, the Italian fashion council, Camera Nazionale della Moda Italiana (CNMI), had proposed a Supply Chain Certification bill to the Minister. CNMI president Carlo Capasa stressed the need to punish malicious behavior without jeopardizing the reputation of the entire "Made in Italy" industry due to the actions of a few. This proposal, too, appears to have stalled.
Looking ahead, experts suggest that brands must fundamentally re-evaluate their relationships with suppliers. Despite advancements in traceability and supply chain due diligence, many brands maintain transactional relationships, exerting pressure on suppliers regarding price and delivery timelines while simultaneously demanding costly sustainability upgrades. This creates a fertile ground for suppliers to cut corners or subcontract work to less regulated, cheaper facilities. Before these Italian probes gained prominence, the prevailing industry assumption was that such challenges were confined to fast fashion. The ongoing investigations, now involving 27 luxury brands, unequivocally demonstrate the systemic nature of these issues.
The fashion industry is currently in a state of disquiet, with brands prioritizing the tightening of their supply chains to avert further scandals. As CNMI’s Capasa remarked last year, "There is no industry without problems. The perfect world unfortunately does not exist. So, we have to find solutions." The current investigations represent a critical juncture, forcing the luxury sector to confront uncomfortable truths and embark on a path towards greater transparency and ethical accountability.
