IKEA: No deep business contacts with Cuban suppliers

http://www.miamiherald.com/2012/11/16/3100374/ikea-we-had-no-deep-business-contacts.html#storylink=misearch



Posted on Friday, 11.16.12

Cuba



IKEA: No deep business contacts with Cuban suppliers



Test sofa sets were of such poor quality that no orders were placed,

IKEA says.

BY JUAN O. TAMAYO

jtamayo@MiamiHerald.com



Furniture giant IKEA did not know about the possible use of Cuban prison

labor to manufacture goods for its stores and did not have a long-term

business relation with suppliers on the island, investigators announced

Friday.



The Swedish company issued an apology after an audit by the Ernst &

Young firm confirmed reports that some suppliers used forced prison

labor, including many political dissidents, in communist-ruled East

Germany in the 1980s.



"We deeply regret that this could happen," in East Germany, manager

Jeanette Skjelmose said in a statement. "The use of political prisoners

for manufacturing was at no point accepted."



But the Ernst & Young report noted that IKEA "never had any long-term

business relations with suppliers in Cuba and … there is no evidence

that [the company] was aware of the possible use of political prisoners

in Cuba" to manufacture its products.



The auditors found that 71 sofa suites — a sofa and two matching chairs

— were produced in Cuba as samples for the Swedish company and at least

one set was sent to the former East Germany for quality inspection by

company officials, the report added.



"The furniture did not meet quality requirements," noted the report,

released in Berlin on Friday. "There is no evidence that the IKEA Group

received other products produced in Cuba."



News reports earlier this year showed IKEA officials in West Germany

contracted East German state companies that used prison labor to

manufacture some of its products in the 1980s. The East Germans in turn

explored hiring Cuban government enterprises that use prison labor to

manufacture some products for the Swedish firm.



The Cuban enterprises have been identified as EMIAT and PROVARI, both

run by the Interior Ministry, in charge of the island's prisons. PROVARI

runs prison manufacturing plants, and EMIAT commercializes the products.



A Cuban government radio report on PROVARI's work in 2011 said it was

established 20 years before "principally with the objective of offering

work to prisoners . . . and integrating them into work useful for society."



Rainer Wagner, head of a group of victims of East Germany's communist

government, told a news conference in Berlin on Friday that he hoped the

furniture company would consider compensating former prisoners for their

forced labor.



IKEA said only that it would make a "financial contribution" to Wagner's

group for its "scientific research project on forced labor" in East

Germany, which officially disbanded after the collapsed of the Berlin

wall in 1989.



East Germany desperately needed hard currency to support its

Soviet-style economy in the 1980s, and its prison labor is estimated to

have cost a tenth of what it would have cost in the West, according to

one Associated Press report.



Many countries, including the United States, use prison labor. But

there's concern that dictatorships can too easily abuse their prisoners.



Ernst & Young said its investigators examined about 20,000 pages of IKEA

documents and 80,000 items in official German archives. They also

interviewed about 90 active and retired IKEA employees and witnesses

from East Germany.



The furniture firm hired the auditors in May to carry out an independent

audit of its East German and Cuba connections, and IKEA U.S. President

Michael Ward met with Cuban Americans in the U.S. Congress in June to

assure them the inquiry was a priority.



"I commend IKEA's serious investigation into its past contacts with the

brutal, oppressive Castro dictatorship," said Rep. Mario Diaz-Balart,

R-Miami. "Other businesses with objectionable past behavior or shameful

business relationships should take note that facing the truth is better

than attempting to bury it."



Rep. Ileana Ros-Lehtinen, R-Miami., added that the IKEA case shows

"companies, not just dictators, that if they engage in these acts they

will be held accountable."