NAPLES, Italy (Reuters) - Italian authorities arrested the boss of a company in the southern city of Naples that employed dozens of undocumented workers allegedly making leathergoods for some of Europe's best-known luxury groups.
Vincenzo Capezzuto, head of Moreno Srl was placed under house arrest on charges of illegal employment and abduction, his lawyer, Rosario Pagliuca said.
Industry and investigative sources said the workshop in Melito, a suburb north of Naples with a large immigrant population, made shoes and bags for groups including Armani, Kering's (PA:PRTP) Saint Laurent and LVMH's (PA:LVMH) Fendi, whose products can sell for thousands of euros.
None of the companies confirmed any connection with Moreno and Saint Laurent denied any relationship.
Worldwide the luxury goods industry is estimated to be worth some 276 billion euros ($305.86 billion) in 2019, according to consultants Bain & Co and Fondazione Altagamma, the Italian luxury goods manufacturers' industry foundation.
However the case highlighted the murky world of sweatshop labor and fly-by-night subcontractors that lies behind many areas of the industry, which draws heavily on the cachet of the "Made in Italy" brand.
As police searched Morena's premises, some 50 workers, including a pregnant woman and two teenagers were hiding in a storeroom among rolls of leather and piles of shoes and bags before being found and brought out.
Pagliuca defended his client, saying small suppliers were integral to the industry and were often underpaid by the big fashion houses.
"The manufacturing district around Melito is seen as China, where production is decentralized from European industry due to low costs and poor workers' rights," he told Reuters.
He also denied workers had been abducted, saying they had agreed to hide to stop the company being shut down. He said they would all be put on regular contracts.
Most large fashion groups have teams of inspectors to ensure contractors respect labor and health and safety rules.
"But the production chain at times is too long. It happens that the original suppliers subcontract to other companies, without the brands knowing," a person working in the luxury industry told Reuters on condition of anonymity.
Saint Laurent, controlled by French luxury group Kering , said it had no relationship with Moreno. "We are currently investigating the matter," it said.
In a statement, Armani said Moreno was not one of its direct suppliers or an authorized subcontractors. Fendi declined comment.