IKEA Says Suppliers in the Past Did Use Forced Labor
On Friday, IKEA Group announced the results of a six-month investigation into past purchasing practices at the company, confirming allegations that the company purchased goods from suppliers that used East German prison labor more than two decades ago.
Said IKEA in a press release: "The investigation indicates that political and criminal prisoners were involved in parts of the component or furniture production units that supplied to IKEA 25-30 years ago. The investigation also shows that there were IKEA Group representatives who at the time were aware of the possible use of political prisoners in the former GDR production. Even though the IKEA Group took steps to secure that prisoners were not used in production, it is now clear that these measures were not effective enough."
IKEA commented: "We deeply regret that this could happen. The use of political prisoners in production has never been acceptable to the IKEA Group. At the time, we didn't have today's well-developed control system and obviously didn't do enough to prevent such production conditions among our former GDR suppliers."
Responding to reports in the media that certain IKEA suppliers in Cuba and the-then German Democratic Republic (East Germany) had utilized prison labor in the past, IKEA had hired consulting firm Ernst & Young to investigate the allegations.
As regards Cuba, no evidence of substantial purchases of goods were uncovered, the company said. IKEA apparently purchased "limited amounts" of "test products" from Cuban suppliers, but never bought in bulk, citing the low quality of the goods.
The IKEA Group says it will make a financial contribution to a scientific research project on forced labor in the former GDR.
The article IKEA Says Suppliers in the Past Did Use Forced Labor originally appeared on Fool.com.Fool contributor Rich Smith has no positions in the stocks mentioned above. The Motley Fool has no positions in the stocks mentioned above. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.
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