Ikea fires corrrupt execs
Ikea has always had the reputation to combat corruption to the max. It launched its first store in Russia in 2000. That launch was hindered by bureaucracy and ‘bribe seeking’ attention from local officials. 7 years later, Ikea still faces the same hurdles each time it opens a store location:
The store’s opening has reportedly been delayed on eight separate occasions, with local officials refusing each time to supply the necessary documents. The latest objection, according to Ikea, is that the store is insufficiently resistant to hurricanes. That’s a highly unusual requirement, in a region not previously noted for its high-power winds.
Ikea does not give in to corruption and builds a public case against Russian practices. It has plenty of experience to counter Russian pressure.
Weeks before the opening of its flagship store outside Moscow in 2000, Ikea was approached by employees of a local utility company. If the Swedish retailer wanted to have electricity for its grand opening, it had to pay a bribe. Instead, Ikea rented diesel generators large enough to power a shopping mall. The generators roared to life in a loud rebuke to the corrupt executives who thought they had the retailer cornered, and soon the utility turned on the power.
Some Ikea stores apparently still run on generators.
But Russian graft may have proved more stubborn than Ikea. The board of Ikea’s operating company, which is based in the Netherlands, has concluded that the Russian executive hired to manage the generators was taking kickbacks from the rental company to substantially inflate the price of the service. Ikea said that such a fraud could cost it about $196 million over two years. Ikea canceled the contract and sought redress in Russian civil court. But in rulings over the last two weeks, Ikea has lost another 5 million euros in damages that the judges awarded the generator rental company for breach of contract.
Two Ikea execs were fired because of the kickback charges. Ikea expressed disappointment over the issue. So the Russian corruption tentacles finally found its way into Ikea. With these tentacles now cut off, let’s wait and see what the next attempt to struggle Ikea will be. If you can’t beat them, join them… or keep fighting all the way.
http://www.nytimes.com/2010/02/16/business/global/16ikea.html
http://www.nytimes.com/2009/09/12/business/global/12ikea.html
http://www.spiegel.de/international/business/0,1518,632507,00.html
