Tod's Faces Labor Exploitation Probe Over Chinese Subcontractors

The Milan public prosecutor's office has initiated an investigation into luxury shoe brand Tod's and three of its executives concerning allegations of labor exploitation. This development, confirmed by court documents reviewed by AFP, highlights serious concerns within the luxury fashion supply chain regarding ethical labor practices.

Prosecutors allege that Tod's, renowned for its loafers, was fully aware of the exploitation occurring within its network of Chinese subcontractors. The accusations include violations related to excessive working hours, inadequate pay, compromised health and safety standards, and "degrading" living conditions for workers. The investigation further claims that Tod's lacked the necessary "organisational models" to effectively prevent such exploitation among its subcontracted workforce.

According to the court documents, Tod's reportedly outsourced its audit function to external providers but then "failed to take into account, even minimally, the results of those inspections, which revealed numerous signs of exploitation." The three Tod's executives under investigation hold key responsibilities for operations, supply chain management, and compliance. The probe focuses on the alleged exploitation of 53 workers, predominantly Chinese, employed by six distinct Tod's subcontractors.

Previously, Milan prosecutor Paolo Storari had sought to ban Tod's from advertising for a period of six months. A hearing to address this request is scheduled for December 3, following a decision by Judge Domenico Santoro on November 14. Prosecutors, in an October 29 motion, contended that the "unlawful system described generated enormous profits through the exploitation of (severely underpaid) Chinese labour and was made possible by serious organisational deficiencies" within the company.

The extensive 144-page court document includes a harrowing account from a Chinese worker, who claimed that at one subcontractor, he was physically assaulted by his boss with fists and a plastic-and-aluminium tube during a dispute over €10,000 in unpaid wages. Despite a contract stipulating four hours of work per day, the employee testified to working from 9 am until 10 pm, with only two half-hour breaks for meals and no days off.

The investigation critically illustrates "a phenomenon where two worlds... that of luxury on the one hand and that of Chinese workshops on the other, come together for a single objective: cost reduction and profit maximisation through non-compliance with labour law provisions." Prosecutors have characterized Tod's "organisational shortcomings and lack of controls" as going beyond mere negligence, describing them as displaying "malice."

In a related development, the Milan public prosecutor's office had earlier requested that Tod's be temporarily placed under judicial administration due to its alleged failure to conduct adequate checks on its production chain. However, this request was rejected. In a statement released on Thursday, Tod's confirmed it was examining these "additional elements" with care, while also expressing concern over their "worrying timing" following the rejection of the judicial administration request.

Last month, Tod's founder Diego Della Valle publicly defended his company, asserting to journalists that Tod's is globally respected and upholds "ethical values." He also cautioned that such investigations could potentially harm the reputation of "Made in Italy" brands. This situation echoes similar actions taken against other high-end brands in Italy, such as cashmere specialist Loro Piana, which have also been placed under judicial administration due to concerns over subcontractor working conditions.