IKEA investigating its past links to Romania's Communist secret police

By bne IntelliNews May 20, 2014

Andrew MacDowall in Belgrade -


IKEA, the Swedish furniture retail giant, has launched an internal investigation into allegations that it was involved in running hard-currency payments to a company controlled by Romania's brutal Communist-era secret police, bne can reveal.

The claims, initially made by Romanian newsportal HotNews.ro, and published internationally for the first time by bne, allege that in the 1980s IKEA ran an "overbilling" operation that channelled cash to a firm run by the Securitate, responsible at the time for torture, assassinations and the suppression of opposition for the quasi-Stalinist regime of Nicolae Ceausescu. Ex-Securitate officials and their allies are widely seen as having continued to wield influence in Romania after the revolution in 1989, and indeed to this day.

IKEA says that its arrangements in Romania in the 1980s were entirely normal for that era, and says that it has yet to find evidence that it did business in breach of its own code of conduct. But the company is not able to deny the alleged arrangement outright. 

According to HotNews.ro, for at least two years between 1985 and 1985, 6.2% was added to orders of furniture produced by Romanian export-import company ICE Tehnoforestexport in an "overbilling" operation. IKEA was, and still is, a large puchaser or Romanian-made furniture goods. Of this, 1.85 percentage points were channelled by Tehnoforestimport to a Securitate-run and staffed firm, ICE Dunarea, with the remaining 4.35 points sent to an IKEA account in the former East Germany (the DDR).

The details of this arrangement were uncovered by HotNews.ro correspondent Claudiu Zamfir in the archives of the National Council for Study former Securitate Archives (CNSAS). HotNews.ro admits it "did not find any document bearing signatures of both IKEA and Securitate representatives," and IKEA says that it has found no evidence of a direct link to the Securitate. But Henrik Elm, IKEA's Global Purchase Manager, was unable to refute the claims entirely in an interview with bne.

And HotNews.ro editor Dan Tapalaga is in no doubt of the Swedish firm's culpability for its involvement with the secret police, even if indirect. "ICE Dunarea was one of the most important state companies before 1989, controlled by the Securitate," he tells bne. "The Securitate spread terror among ordinary people, immediately arresting anyone attempting to protest against Ceausescu's regime. Human rights were smashed in the '80s. Doing business with such a state only to increase your profits, helping a criminal communist regime to survive by paying the Securitate, is a shame for a western company. They must be exposed at least for this hidden, shameful economic compromise 30 years ago. People have the right to know and to judge."

Hard cash

Experts on Romania during and after Communism say they aren't surprised by the allegations. "Anyone familiar with the nature of the foreign intelligence operations during the Ceausescu era should know that they were meant to serve the regime's voracious appetite for hard currency," Vladimir Tismaneanu, a Romanian-American professor of political science at the University of Maryland, tells bne. "This was the dark world from which many of the influential figures of the post-communist transitions (politicians as well as oligarchs) emerged in Romania and in other former Soviet Bloc countries. In the Romanian case, the Securitate was the "sword and shield" of a particularly grotesque and murderous tyranny."

Tismaneanu cites the torture assassination in prison of Gheorghe Ursu, an opposition activist, for the crime of keeping a diary detailing the state's failings; and the savage interrogation and long jail sentences meted out to protesting industrial workers in Brasov in 1987. "Such terrible facts were known to any decent person who cared about human rights," he says.

Tom Gallagher, an emeritus professor at the University of Bradford in the UK, tells bne that, "it is hard to believe that IKEA was altogether unaware of the ruthless Ceausescu operatives with which it was transacting business… Rather a lot of important European businesses seem relaxed about dealing with autocratic regimes however much they disrespect basic political rules."

While IKEA's Elm defended the company's Communist-era business in Romania and insisted that the company's own investigations had yet to find evidence that company officials knew it was funding the Securitate, he admits that, "the fact that the business referred to took place 30 years ago makes it difficult to get a complete picture".

"We take all matters of this kind very seriously," he tells bne. "We are trying to put the pieces together to get a better picture of how the business was running. The documents we have inside IKEA don't cover all the details that far back in time, we are trying to find out more details. In the '80s the handling of hard currency and money was not a very easy process."

Elm says that the so-called "overbilling operation" was very common in Communist-era Eastern Europe. He asserts that it was a commission paid on top of the purchase price of the Romanian furniture shared between Technoforestimport as a representative of the suppliers, and IKEA, as payment for the latter's investment in plant and training in Romania, bringing valuable knowledge and technology transfer to the country. "We had only one business partner, Technoforestimport, which set up the [financing] structure, a very normal commission-based structure," he says. "It is nothing confidential."

However, IKEA has come a cropper for its dealings in Communist-era Eastern Europe in the past. In 2012, the company apologised after an independent investigation that it had commissioned found that its suppliers in the DDR had used forced labour, and that IKEA representatives were probably aware that political prisoners were involved. IKEA's code of conduct has been strengthened since the fall of Communism, most recently in 2000, though Elm says that much the same rules applied in the 1980s. "We have the same demands as on every supplier, including a code of conduct – a very, very robust code of conduct – and a very good way of verifying this code of conduct and if there are any dealings that were not in line with the code of conduct," says Elm.

He also cites a list of countries that IKEA will not do business with, though many would say that Ceausescu's Romania, a notoriously egregious abuser of human rights, had as much reason to be on the blacklist as any.

Whatever more comes to light in the case, Tapalaga admits that it is unlikely to harm IKEA's operations today in Romania. IKEA is a major player in the Romanian furniture sector, purchasing €420m worth of goods from the country in 2013, and operates one store in Bucharest generating RON440m in revenue (including VAT) last year. As Elm points out, the company contributes hundreds of millions of euros to a beleaguered economy – he cites a recent €80m investment in a foam factory – supporting thousands of jobs. 

For better or for worse, many Romanians would sooner forget the Securitate oppression – and consider the perceived continued influence of intelligence structures in Romania as something they can do little about.

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