Giorgio Armani bags and accessories were produced by ‘exploited’ Chinese workers near Milan, Italian Police said today. 

The force claimed that an unauthorised subcontractor employed the staff and that the fashion house failed to monitor the health and safety flaws. 

According to police, GA Operations hired a subcontractor, which in turn hired unauthorised Chinese subcontractors that employed workers under the table, some of whom were in Italy illegally.

However, Giorgio Armani has denied wrongdoing by GA Operations, which produces apparel, accessories and furnishings for the Giorgio Armani Group brands. 

They allegedly disregarded health and safety regulations as well as rules governing working hours, breaks and days off.

Police said it was part of a system of caporalato, the illegal intermediation and exploitation of workers most often associated with the agricultural sector.

Four Chinese factory owners face a separate criminal investigation for their role.

GA Operations, meanwhile, is not under investigation, but has been placed under judicial administration for up to a year as part of a procedure to ensure legal operations, said Lieutenant Colonel Loris Baldassarre, of the Carabinieri.

A diagram released by police indicated that the Chinese subcontractor was paid 93 euros (£79) for a handbag that the fashion house sold for around 1,800 euros (£1,425).

The authorised subcontractor, acting as the middleman but without real production capabilities, was paid 250 euros (£198) for the same bag, pocketing 157 euros (£119) for each bag, police said.

In a statement, Italian Police said: ‘The system allows for maximising profits (in which) the Chinese factory actually produces the products, lowering labour costs by resorting to off-the-books and illegal workers.’

A video released by carabinieri showed a workshop where leather goods were being made, with two beds with blankets in an adjacent office.

A second-floor dormitory, reached through a gated stairway, had a set of bunkbeds and another bed strewn with clothes and blankets.

Cooking pots were piled in a filthy bathroom alongside a broken sink and a pot with water containing what appears to be eel.

A makeshift kitchen included a gas burner next to a wall splattered with food. Dirty dishes and uneaten food were piled on the sink. Cardboard was taped over the windows.

The finding is part of a wider investigation into the fashion supply chain operating in the Milan and Bergamo provinces, which placed bag and accessory maker Alviero Martini Spa under judicial administration in January, Mr Baldassarre said.

In the more recent case, police investigated four illegally operating factories with unhealthy working conditions and a series of safety violations, including illegal dormitories with ‘sanitary and hygienic conditions below the ethical minimum’.

The factories were ordered closed, and the four Chinese owners facing a separate criminal investigation were handed fines and administrative sanctions totalling 145,000 euros (£124,000).

Giorgio Armani told MailOnline: ‘We learn of the prevention measure decided by the Courts of Milan against GA Operations.

‘The company has always had control and prevention measures in place to minimize the risk of abuses in the supply chain.

‘GA Operations will collaborate with the utmost transparency with the competent bodies to clarify its position on the matter.’