Ikea said Tuesday that it was suspending further investment in Russia, apparently because of pervasive corruption and demands for bribes.
The announcement came after a rare statement by Ikea’s 83-year-old founder in a radio interview that Ikea had decided not to solve problems by slipping money under the table.
Russian President Dmitri A. Medvedev has acknowledged that corruption is a national problem, and curbing official corruption is one of the goals of his tenure.
Mr. Medvedev has signed a law prohibiting surprise inspections from fire and health authorities of the type often used to extort companies, and has required bureaucrats to disclose not only their own income and assets but their spouses’, a once common conduit for bribes. Beyond embarrassing Mr. Medvedev’s administration, the Swedish retailer’s public stance could mark an economic turning point if it leads to more Western businesses speaking out against corruption here.
The decision is particularly damning for Russia because Ikea runs outlets in dozens of countries around the world and is hardly thin-skinned when it comes to dealing with bureaucracies.
“We all support the anticorruption policies of President Medvedev,” Elena A. Panfilova, Russia director of Transparency International, the anticorruption group, said in a telephone interview. “But people need to see real results. And if companies like Ikea don’t see results in their daily business practices, it’s sad news for Russia.”
In a statement, Ikea’s Russia director cited the “unpredictability of administrative processes” in Russia as the basis of the decision. Outside experts said that was the company’s way of describing a pattern of bribe-taking and shakedowns by Russian officials that had become intolerable.
“Ikea as a major shopping center developer wishes to invest in Russia to serve our customers and bring jobs and growth,” the director, Per Kaufmann, said in the statement. “Yet, as long as the principal issues being crucial for Ikea development in Russia remain pending, we have to put all new investment plans on hold.”
Ikea’s announcement came after a series of public complaints, including from the company’s founder, the secretive billionaire Ingvar Kamprad, who went on Swedish radio to complain that the company had been cheated out of millions of dollars by overcharging for electricity. Mr. Kamprad linked the problems to Ikea’s decision not to pay bribes in Russia.
The announcement came after a rare statement by Ikea’s 83-year-old founder in a radio interview that Ikea had decided not to solve problems by slipping money under the table.
Russian President Dmitri A. Medvedev has acknowledged that corruption is a national problem, and curbing official corruption is one of the goals of his tenure.
Mr. Medvedev has signed a law prohibiting surprise inspections from fire and health authorities of the type often used to extort companies, and has required bureaucrats to disclose not only their own income and assets but their spouses’, a once common conduit for bribes. Beyond embarrassing Mr. Medvedev’s administration, the Swedish retailer’s public stance could mark an economic turning point if it leads to more Western businesses speaking out against corruption here.
The decision is particularly damning for Russia because Ikea runs outlets in dozens of countries around the world and is hardly thin-skinned when it comes to dealing with bureaucracies.
“We all support the anticorruption policies of President Medvedev,” Elena A. Panfilova, Russia director of Transparency International, the anticorruption group, said in a telephone interview. “But people need to see real results. And if companies like Ikea don’t see results in their daily business practices, it’s sad news for Russia.”
In a statement, Ikea’s Russia director cited the “unpredictability of administrative processes” in Russia as the basis of the decision. Outside experts said that was the company’s way of describing a pattern of bribe-taking and shakedowns by Russian officials that had become intolerable.
“Ikea as a major shopping center developer wishes to invest in Russia to serve our customers and bring jobs and growth,” the director, Per Kaufmann, said in the statement. “Yet, as long as the principal issues being crucial for Ikea development in Russia remain pending, we have to put all new investment plans on hold.”
Ikea’s announcement came after a series of public complaints, including from the company’s founder, the secretive billionaire Ingvar Kamprad, who went on Swedish radio to complain that the company had been cheated out of millions of dollars by overcharging for electricity. Mr. Kamprad linked the problems to Ikea’s decision not to pay bribes in Russia.