Ikea's heart of darkness: A tale of racism, lies and Swedish meatballs

Ikea looks like a model of openness and visibility. From its voluminous warehouse-size stores to its furniture's clean lines, the retailer presents a vision of honesty and total disclosure. Even founder and President Ingvar Kamprad (pictured) seems to be an open book: a simple farmer's boy from rural Sweden who overcame dyslexia and alcoholism to become one of the world's wealthiest men. Yet, even as he's risen to the top of the business world, he still has an old Klippan sofa and a Billy bookshelf in his living room, showing that he remains a humble, salt-of-the-earth type who hasn't forgotten his roots.

Not according to Johan Stenebo. Kamprad's former personal assistant, Stenebo reveals in a new book published in Sweden that the budget-furnishings monolith seems to have quite a few sordid secrets. The Truth About Ikea has yet to be translated into English, yet it's already sent ripples through the media, as Ikea fans learn that all may not be sunshine and meatballs at their favorite cheap, simple, eco-friendly big-box home-furnishings store.
A Deep Vein of Racism

Stenebo's position has given him amazing access to Kamprad, but he's not the first to question the furniture tycoon's morality. A journalist in 1994 threatened to expose Kamprad's adolescent membership in Nazi youth organizations. Kamprad addressed the matter publicly, apologizing to his Jewish employees and dismissing this revelation as a brief and foolish flirtation with Nazism. But it appears he may have been raising funds and recruiting members as late as September 1945, and he remained friends with a Swedish fascist politician through the 1950s.

And Kamprad's Nazi adventure may have been indicative of a deeper vein of racism. Stenebo says Ikea execs often refer to foreigners as "niggers" and deny them promotions. All of Ikea's top executives come from the same small region of Sweden as Kamprad, Stenebo alleges; he also characterizes Kamprad's heir apparent, Peter, as an "incompetent racist."

Environmental Concerns

What of Ikea's reputation as an eco-friendly retailer? In 1992, the company famously adopted an Environmental Action Plan that cut down on its use of environmentally damaging products and promoted recyclable and recycled materials. It has stopped giving customers plastic bags, increased its use of solar panels, and introduced other initiatives designed to cut its environmental footprint.

Stenebo himself was managing director of Ikea's GreenTech division, which sells solar panels and other green goods. But he has his doubts about Ikea's green report card. Ikea buys most of its wood from China, where its suppliers are said to be responsibly sourcing their materials, but Stenebo says, "I know that even in China, you can't buy legal wood for the price that we paid there."

Oddly, Ikea's greatest mystery -- and its greatest potential scandal -- doesn't seem to be on Stenebo's radar. This year, Fortune ranked Kamprad the world's fifth richest man; weeks later, Reuters stated that Kamprad was actually the richest man in the world. On one level, this is just an academic argument: for most of us, the gap between Bill Gates's $46.6 billion and Kamprad's alleged $53 billion is really immaterial. But the confusion over whether Kamprad is the wealthiest or fifth wealthiest reveals that Ikea's finances are almost impenetrable. The company is owned and operated by Ingka Holding, a Dutch firm owned by a charitable trust called Stichting INGKA Foundation, which devotes its $1.7 billion in post-tax profits to "innovation in the field of architecture and interior design."

From any other charity, that's a highly admirable goal. From a charity funded by a store specializing in architecture and interior design, that mission lands a little too close to its corporate goals. And the charity's finances are more than a little murky; it's unclear how much of Stichting INGKA's funds make their way to Stichting IKEA, another charitable trust that actually funds interior-design work. And although Kamprad has ostensibly given up control of Ikea, he's chairman of the board of Stichting INGKA -- which means he actually still rules Ikea.

Virtuous -- on Paper

On paper, Ikea could hardly appear more virtuous: an eco-friendly company that gives all its money to a charitable trust. But if Kamprad is actually a canny, media-manipulating, racist ex-Nazi who produces low-quality furniture from questionable materials, running a company whose profits are funneled through a collection of shady Dutch charities that let it dodge taxes while claiming to fund design projects that ultimately become part of the company's research and development -- if all that is true, then Ikea may well be just another big corporation with a big collection of skeletons rattling around in its big closet.

Even if Stenebo's allegations are true, many critics will undoubtedly argue that they only show that Ikea is just like most other companies, for which the quest for lower costs and higher profits occasionally lead to some morally uncomfortable practices. In this regard, Ikea's greatest failing may be its inability to live up to its own hype.
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