Italian labels Patrizia Pepe and Dixie under court supervision over labour exploitation

By Alvise Armellini

ROME, Nov 6 (Reuters) - Italian fashion labels Patrizia Pepe and Dixie have been placed under court administration over the alleged exploitation of foreign workers in their supply chain in Tuscany, prosecutors and judicial sources said on Friday. 

The measure targeted two companies that relied on unscrupulous subcontractors to lower production costs, Luca Tescaroli, chief prosecutor in the city of Prato, said in a statement, without naming them.

Judicial sources later confirmed the companies' identities.

Patrizia Pepe's parent company said in a statement it had cut off ties with the subcontractors more than a year ago as part of its own review of its supply chain, prior to judicial investigations.

"The company reiterates that safeguarding the dignity and rights of workers, at every stage of the supply chain, is non-negotiable and confirms its full respect for the work of judicial authorities," it said.

A spokesperson for Dixie did not respond to a request for comment.

Milan courts have taken similar moves in recent years against other well-known labels, including LVMH-owned cashmere firm Loro Piana and units of fashion houses Valentino and Giorgio Armani, putting pressure on the entire Italian fashion industry to improve labour standards. 

'CULPABLE INACTION AND NO PROPER OVERSIGHT'

Being placed under administration means that court-appointed external administrators will verify steps due to be taken by Patrizia Pepe and Dixie to meet judges' demands on the cleanup of their supply chains.

The two companies, however, are not under any criminal investigation. 

The Florence court that placed them under supervision reprimanded them for "culpable inaction and failure to exercise proper oversight" on subcontractors who exploited Bangladeshi and Albanian workers, Tescaroli said.

The workers were poorly paid, forced to work long hours, denied holidays and constantly harassed and abused, Tescaroli said, adding that 18 of them who cooperated with investigators would be offered legal residence permits.

The prosecutor also said it was the first labour abuse case in the textile city of Prato involving Albanian subcontractors, saying they had adopted criminal practices traditionally associated with Chinese-owned sweatshops.

(Additional reporting by Silvia Ognibene and Emilio Parodi; Editing by Xevi Fontdegloria and Louise Heavens)