MILAN — Tod’s chairman Diego Della Valle on Friday gave an impassioned defence of his company, after it emerged earlier in the week that as part of an on-going investigation into labour exploitation in luxury supply chains, local prosecutors are scrutinising the Italian shoe producer.
Tod’s is the latest company to get caught up in the investigations, which have already netted brands including Armani, Dior, Valentino and Loro Piana. As in the other cases digging into the fashion industry’s complex and opaque supply chains, the alleged abuses, which include severely below market wages, long hours and dangerous working conditions, took place at contractors and subcontractors rather than at factories owned by the luxury companies themselves.
Tod has denied the allegations, saying it complies with all applicable laws and carries out regular and thorough supply chain checks. But prosecutors are seeking to put the brand under judicial administration, arguing its processes for monitoring its supply chain are not adequate.
“What emerges from the investigative activity is that at Tod’s there is a sort of business culture, that is, a set of rules, a way of managing and conducting the company…[that has] favored the perpetuation of illicit activities,” the Milan prosecutors wrote in a court document reviewed by BoF.
Della Valle joined a chorus of industry executives seeking to downplay the issue while blaming a few subcontractors they say account for a tiny fraction of overall production. The allegations have come amid a downturn in demand for luxury goods and have contributed to growing sentiment on social media that the products aren’t worth what they cost.
Delle Valle went a step further than peers at an impromptu press conference, suggesting several times that the Milan prosecutor leading the investigation, Paolo Storari, had ulterior motives.
“In the last year [Storari] has been investigating three, four or five companies; funny how they are all luxury companies, all high-profile, all being challenged by the same prosecutor,” Della Valle said. “And maybe he has every reason to do what he’s doing. I don’t want to interfere with ongoing matters, but I can’t help feeling sometimes that the use of certain tools might be driven by a need for publicity — which, in this case, is really hurting us.”
Della Valle invited Storari to visit a Tod’s factory “before passing judgement,” even though the prosecutors haven’t alleged any wrongdoing at a Tod’s factory.
“Before saying such serious things, you need to really have your facts straight,” Della Valle said. “To talk carelessly about trivial things as if we were real criminals — in my opinion, that’s something to be ashamed of.”
Della Valle’s criticism of Storari, which was at times caustic, at others conciliatory and included the occasional attempt at humour, was an extraordinary display for a usually restrained executive. Tod’s, which is majority controlled by the Della Valle family with L Catterton holding 36 percent and LVMH 10 percent, also owns the Hogan, Fay and Roger Vivier brands.
The judicial investigation into Tod’s supply chain, which dates to last year, emerged on Wednesday amid a dispute between the Milan prosecutors and a local appeals court over who will have jurisdiction. Several of the factories where the alleged abuses took place are near Milan, but Tod’s is based in the Marche region in central Italy. Italy’s Supreme Court set a Nov. 19 hearing to settle the matter.
The investigations found “deeply rooted and tested illicit practice considered to be part of a broader corporate policy aimed at increasing the business,” prosecutors wrote in court documents. “The investigated conduct does not appear to be the result of isolated and extemporaneous initiatives by individuals, but of an illicit corporate policy.”
The allegations are similar to those levelled against other luxury brands. Milanese prosecutors have sought to make the case that these issues reflect systemic problems.
Della Valle’s personal pushback is the most direct response from any of the brands implicated in Italy’s supply-chain scandals. While voicing his defence, Della Valle echoed comments from other fashion executives who have called for changes in Italian laws to reflect the difficulty companies have keeping tabs on their supply chain.
The case against Tod’s is based on inspections carried out by Italy’s labour police, which found uniforms and shoes were being produced for the brand under exploitative conditions in four workshops around Milan and in the Marche region, according to court documents. In some cases workers were allegedly being paid just a few euros an hour to stitch shoe uppers. While in most cases, the issues occurred at subcontracted suppliers, the brand had a direct relationship with one of the factories, the documents say.
“Our companies, the entire supply chain, are fully monitored,” Della Valle said. “Everyone signs an agreement, one that protects jobs. But if someone decides to go off and do whatever they want — and you’re not there to see it — how can you know if they’re working at night? We don’t know. We’re not the financial police. That’s exactly why we need to look at the law in detail and rethink how certain rules are written, because the way things stand now, they just don’t work.”
Italian lawmakers and fashion industry executives are trying to grab control of the supply-chain issues before the scandals spiral further out of control. In July, the industry ministry said it is developing a certification scheme that would free fashion brands from the onus of confirming their suppliers are abiding by the law.
“We can’t treat ‘Made in Italy’ as something insignificant. It represents one of our country’s great strengths and one of the most competitive marks of excellence in the world,” Della Valle said. “Monitor us as thoroughly as possible, by all means — but do it carefully, not carelessly.”
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