Replace Data Center with new IKEA stores and replace the pointy headed boss with the empty headed CEO of IKEA – Pernille Lopez – and you’ve got my final two years at IKEA.
Posted on 22nd June 2012 by Administrator in Economy
Scott Adams really nailed it with this cartoon. I laughed out loud when I read it this morning. I’ve spent my whole working life in middle or upper middle level management. My career has been to convince upper management to make good decisions with the company’s money. As most people know, I’m a numbers guy and prefer to analyze and present a logical fact based case to do something or not do something.
That doesn’t cut it in the corporate world. At least 50% of upper management are morons and asswipes. At IKEA in the late 1990s and early 2000s we were expanding rapidly in the US and Canada. We planned to spend over $2 billion in the space of four years on new stores. Upper management in Sweden had to approve your project before you could proceed. They had an Investment Committee meeting every 3 months and all the countries in the IKEA world would submit their Investment Requests. These were very dry documents which ultimately calculated an ROI on the proposed investment.
At my bosses urging, I took the Investment Request to a new level. The North American Investment Requests became 40 page booklets with high gloss aerial photos, maps, demographic details, pictures, architectural renderings, and of course the financial analysis on page 40. We dazzled the dumbass Swedes into giving us billions to invest.
I had no problem early in this process when the Investment Requests I submitted were based on truthful numbers and facts. But, about midway through the expansion my analysis of the numbers said we should NOT be making $100 million investments in stores that would not generate enough sales. This resulted in the head of IKEA Canada screaming at me in the middle of a Board Meeting for trying to undermine his plans.
Even kittens in my powerpoint presentation wouldn’t have been simple enough for the vacuous dimwitted IKEA CEO Pernille Lopez to understand. You can tell Scott Adams has spent many years in the corporate world.
Ingvar Kamprad, the owner of IKEA, is the gift that keeps on giving. More revelations about his “youthful indiscretion” of belonging the the Swedish Nazi party from 1943 through the early 1950s. Usually youthful indiscretions end in your youth, not your mid twenties after knowing that the Nazis had murdered 6 million Jews. It seems even at the age of 85 he still thinks the Nazis were a decent bunch. They were just misunderstood. This fucking prick is the reason I got shown the exit at IKEA. If you are new to the site, here is my story at IKEA:
The funniest part of this is that if you google the name of the bitch CEO who fired me at IKEA – Pernille Lopez – the first thing that comes up on google is my article trashing her. She must love that. Serves the bitch right.
Book showing Ikea founder had deeper Nazi ties makes waves
By Nina Larson (AFP) – 5 hours ago
STOCKHOLM — The founder of Ikea admitted long ago he foolishly flirted with Nazism in his youth, but a new book is making waves in Sweden with claims his ties to the fascist movement went much deeper than he has acknowledged.
Ingvar Kamprad, the 85-year-old Swedish billionaire who founded and still largely controls furniture giant Ikea, confessed in the 1990s that he had had links to the Nazi youth movement during World War II, when Sweden was neutral, describing it as the “greatest mistake of my life.”
He has always described the decision as the “folly of youth,” but a book published this week by journalist Elisabeth Aasbrink quotes Kamprad in an interview last year still hailing the Swedish fascist leader Per Engdahl.
“That was perhaps what was most surprising,” Aasbrink told AFP. “He has always said he got involved due to teenage confusion, but actually in August last year he was still loyal to this fascist leader.”
“He told me: ‘He (Engdahl) was a great human being and I will maintain that as long as I live’,” she said.
Swedish media have in recent days debated the book’s revelations, with an editorial the Dagens Nyheter newspaper ironically stating Thursday: “It was his life’s biggest mistake. And yet he keeps repeating it, for the rest of his life.”
Daniel Poohl of the anti-racist magazine Expo said the revelations were serious.
“Everyone has the right to make a mistake and get a second chance, but it is obvious that Kamprad still sees Per Engdahl as a great person,” he said in an interview with public broadcaster SVT.
“This was not just about happening in on a meeting by accident,” Poohl added.
Neither Kamprad, who lives in Switzerland, nor his spokesman could be reached for comment, but a statement on Ikea’s website stressed: “What happened almost 70 years ago is something Ingvar has apologised for numerous times … and has nothing to do with Ikea’s activities.”
“Ingvar has dedicated his adult life to Ikea and the democratic values Ikea stands for,” it added.
Aasbrink’s book “And in Wienerwald the trees remain” tells the story of Otto Ullman, a Jewish boy sent from Austria to Sweden right before the outbreak of World War II and soon becomes friends with Kamprad.
“Ingvar said to me: ‘don’t misunderstand me, but I fell in love.’ And they immediately became very close friends. They were 17 and 18 years old,” the author explains.
She says she did not start the project to dig into Kamprad’s Nazi past, but had wanted to understand how the Ikea founder could have been such good friends with Otto and at the very same time involved in a movement “with ideas that his friend was suffering the consequences of.”
“His parents were murdered in Auschwitz,” she pointed out.
But when she repeatedly asked Kamprad to explain what he was thinking at the time, he had finally said: “I cannot see any contradiction in this.”
Kamprad remained friends with Engdahl for years after the war ended, and Aasbrink’s book details a wedding invitation the Ikea founder sent the fascist leader in 1950 describing how he was proud to belong to the same circle as him.
Aasbrink also discovered that Kamprad, who has admitted activity in the far-right New Swedish Movement, had previously been a member of the more extreme Swedish Socialist Unity (SSS) party, with the member number 4014.
Sweden’s intelligence police Saepo had started a file on him in 1943, when he was 17, titled “Nazi”, she said.
“They obviously thought he was Nazi enough to create a file,” she said, adding she had been disappointed not to get access to possible file documents from after 1949 to probe how long Kamprad’s link to the SSS had lasted.
According to the part of the file she had seen, though, she said Kamprad claimed he “had recruited members … and doesn’t seem to miss an opportunity to serve the party.”
Aasbrink says she has received a lot of support, but also a number of angry letters and emails from people upset she was tarnishing a man widely respected for spreading a positive image of Sweden in the world.
“A lot of people think he’s a good representative for Sweden,” she said, adding: “I have also been criticised because he is an old man, but I didn’t interview him in an old people’s home. I interviewed him in Ikea’s headquarters.”
When I started this post I was just planning to talk about the article below and my knowledge of IKEA’s tax strategy. But, as I started writing it became my life story at IKEA. The memories came pouring out. When you spend 14 years giving your heart and soul to an organization, there are a lot of fond memories and a bitter ending. I hope you find it interesting. It meanders around because I kept remembering things that I inserted as I went along.
I guess it is cool that the 11th richest man on earth changed the course of my life 7 years ago. Only, it still eats away at me. Let’s get to the whole sordid story.
Another IKEA expose on Swedish television this week. They’ve “discovered” that IKEA tries to avoid taxes. No kidding. Every corporation in the world tries to avoid taxes. The story also notes the fact that the stores are designed to confuse shoppers and keep them trapped in the store. Wow!!! These journalists are sharp. The longer someone stays in a store, the more money they are likely to spend. What do they think the kid’s ball room and the restaurant were there for? The funniest part of the article is the rehashing of Ingvar Kamprad being a Nazi. I was there in 1993 when the info was revealed. The funniest part of Ingvar being a Nazi was that he joined the Swedish Nazi Party in 1945, AFTER EVERYONE KNEW THAT THE NAZIS HAD MURDERED 6 MILLION JEWS. His excuse was that it was a youthful indiscretion. He was 20 years old in 1945 and remained in the Party until the early 1950s.
I know everything there is to know about IKEA’s tax strategy. I was hired by IKEA in 1989, a bright eyed and bushy tailed 25 year old. The company had only been in the US since 1985 and its revenues were less than $80 million. I was hired as Financial Reporting Manager/Tax Manager/Whatever Needed To Be Done Guy. We were a lean organization. There was one copy of Lotus 123 on one computer in the whole office. I was in that role for 4 years and then became Treasurer, still with responsibility for taxes. So, I became quite knowledgeable about IKEA’s tax structure and chipped in with a few creative ideas.
My boss, Mike, was the CFO. I worked under 4 CEO’s in my 14 years at IKEA. The first was Bjorn, Ingvar’s nephew. He was a drunk. But, he was a likeable drunk. The CFO wouldn’t let Bjorn see the financial results. You could find him at lunchtime in the Plymouth Meeting Mall bar having a drink or three. IKEA was the most politically incorrect place you could imagine when I started there. The Swedes were notorious for screwing around. There were affairs happening all over the office. The site for the 1st store was selected because the dude they sent over from Sweden liked the school district near the site for his daughter. It was like the Wild West. My boss was the biggest practical joker of all-time. The Swedes had a cruel sense of humor. When you turned 40, they would be unmerciless. Bjorn lived in Phoenixville. When he turned 40, my boss took out a full page ad in the Phoenixville newspaper announcing a 40th birthday party at Bjorn’s house with free beer and food for anyone who would like to attend. Bjorn’s house was inundated with biker types, as most of Phoenixville was on a lower income scale.
The stories about Ingvar and IKEA being cheap skinflints is absolutely true, in one sense. When Ingvar came to our offices he stayed at the George Washington Motor Lodge across the street from the Plymouth Meeting Mall. This may have been the crappiest motel on earth. The joke in our office was that before entering one of their rooms you should rattle your keys so the cockroaches would scatter. This billionaire would then walk to our offices. It was true that he was cheap, but other stories showed him to be a bit of a fraud. He lived in Switzerland and the Swiss IKEA organization decided to buy him a new Volvo car. He was surprised and delighted at the gift, but one problem. It was too ostentatious for him. It had power windows. He thought that was too much, so he requested that they replace it with one that had roll down windows. It seems Volvo had stopped making cars with roll down windows. No one told Ingvar, but Volvo made him a special car with roll down windows for a substantial added cost to the Swiss IKEA organization. He also owns great works of art, vineyards, ski resorts, yada, yada, yada. He ain’t living a pauper’s life.
We always flew coach. We were told to fly on our own time. We stayed in some of the dumpiest hovels the world has ever seen. The Best Western was an upscale hotel for us. We would work at the grand openings of our stores for one week, but we had to double up in the hotel rooms. For the Pittsburgh opening, I had to share a room with our Internal Audit manager at a Red Roof Inn. He snored like a freight train. It was a long week. IKEA was very much a family in those days. Our spouses were invited to work at the IKEA Elizabeth grand opening. Avalon and I got to work 12 hours a day and then stay at the Holiday Inn Newark at night. Lots of drinking, partying and crazyness. We’ll never forget it.
We’ll also never forget our two week adventure across Europe in 1991. Mike wanted me to visit the corporate offices in Humlabaek, Denmark and the heart of IKEA in Almhult, Sweden. Avalon and I had never ventured much farther than the Jersey Shore in our entire lives. We decided to tack on a 2nd week to my trip and take trains to Amsterdam and Brussels. On a map, they looked pretty close. We booked the flights, hotels, and trains and off we went on our adventure of a lifetime. It was the middle of summer and we left my car in the IKEA office parking lot and got a Shuttle to Newark Airport for our flight to Copenhagen. I had never driven a car with a stick shift in my life, so I requested an automatic when I booked my car for Copenhagen. Little did I know, but 95% of the cars in Denmark are stick. It was well known that everyone at the corporate off ice drove crappy old cars as a badge of honor (their Porsches were in their garages at home). When we arrived in Copenhagen the lady at the car desk handed me the keys and we went outside to find our car. To my horror, there was a beautiful huge shiny Jaguar in my spot. It was the only automatic transmission they had. We spent the weekend in Copenhagen. It is a beautiful place. We loved it. Monday we headed up the coast to the head office. I pulled in to the parking lot and parked as far away from the entrance as possible. No one saw me. After two days, it looked like I would avoid detection. It was now onto Almhult. We needed to drive our car on a ferry to Sweden and then drive to Almhult. It just so happened that Hannu, the worldwide Treasurer, was going to Almhult and offered to let us follow him. My heart went into my throat. He drove a dumpy 10 year old Volvo station wagon. I pulled behind him in my 1 year old Jaguar. We drove onto the ferry and parked. He got out of his car and with a huge smile on his face walked up to my window, looking my car up and down, and said in his Finnish accent, “Yim in a Yag”. Translation – Jim in a Jag. The cat was out of the bag. Phone lines from Denmark to the US were burning up. Practical jokes and abuse were heaped on me for years. Fake memos about my car choice were produced.
Eventually, Avalon and I got to the train portion of our adventure. The train rides were much longer and more uncomfortable than we envisioned. We had a great time in Amsterdam wandering that decadent place. Brussels had the best food we ever tasted. Bruges was a fascinating look into the past. But, being a clueless moron, I had booked our return flight from Copenhagen rather than Brussels. We needed to take a 12 hour train ride from Brussels back to Copenhagen to catch our flight home. That was bad enough, but we didn’t read Flemish very well, so we accidently got on the wrong train headed into the mountains of Belgium. The conductor barely spoke English. We were stuck at train station in the Belgian mountains waiting for another train. The train got to Copenhagen 1 hour before our flight home to Newark. We grabbed a cab and told him to floor it. The people at the airport said we’d have to make a run for it. Our terminal seemed like miles away. We did our best OJ Simpson impressions running through the airport and made it just as they were closing the doors. We had been awake for 15 hours on trains and must have smelled pretty ripe. Now another 8 hours across the Atlantic. Our luggage didn’t make it. Once in Newark we had to take a shuttle back to Plymouth Meeting. This was another 3 hours as they had to drop people off. Eventually, after about 30 hours of travel with virtually no sleep, we got back to the IKEA offices. As we dragged ourselves to my car, lo and behold, Mike my boss had shrink wrapped my entire car in the middle of the summer. The sun and heat had practically melted it solid. He had also accidently broken my side view mirror in the process. I was not a happy camper. But, it makes a good story in retrospect.
Now back to the main story.
Bjorn was replaced by Goran, a douchebag from Volvo. He was a pompous egotistical asshole. After 3 years he was eventually kicked upstairs to Europe and replaced by Jan. He was the best CEO I’ve ever had the privilege to work for.
He didn’t have an ego. He listened. He trusted the opinions of his lieutenants. He was a good person. He had a good sense of humor. And he managed the company to a $100 million profit on $600 million in revenue. When Jan left, the company went into the toilet. The morons in Europe felt they needed a diversity CEO. They promoted Pernille from HR Manager (HR was a joke) to CEO. She was the most clueless shrew to ever hold the title of CEO. She ran the company into the ground, eventually generating nice sized losses before being canned. Not before running me and many others out of the company.
But, back to the point of the story – IKEA’s tax strategy. I learned early on that Ingvar hated taxes. It was well known within the company that the entire structure of the company was to avoid taxes. It was owned by a charitable foundation. We all knew the foundation was a joke. Supposedly, Ingvar lived in Switzerland and had nothing to do with the retail organization. In reality, the European CEO was a figurehead and Ingvar called all the shots. There was a Treasury center in Brussels and other entities in Ireland. There was our own insurance company. All of these entities existed to take advantage of tax loopholes. It was a brilliant strategy.
The beauty of the setup was that the income could be generated in low tax jurisdictions and losses generated in high tax jurisdictions. In the US we had IKEA Retail, IKEA Wholesale, IKEA Property, IKEA Services, and IKEA Trading. As the goods were sourced and sold to the US entities, various “FEES” were paid. A franchise fee of 3%, product development fees of 5.5%, sourcing fees of 2%, interest on intercompany loans, manangement services fees of a couple million per year. In the early 1990′s we were losing $30 million per year and we just happened to be paying about $30 million per year to various foreign IKEA entities.
In my 3rd year we received notice that the IRS was going to audit the US operation. Ingvar’s right hand man, Hans, the architect of the legal structure got myself and my boss on the phone and warned us that we better not lose in the IRS audit. I felt the pressure. The clods from the IRS were in our offices for over a year and I convinced them that every fee, charge, and markup was legitimate. My star rose in Sweden.
As a side note, besides being responsible for our corporate tax returns, I also took care of the personal returns for all the Swedish executives. IKEA paid to have all the tax returns done for the foreign transferees. The funniest incident occurred with our architect Nils, who sometimes makes a comment or two on TBP. Peat Marwick handled our tax returns. After completing the tax returns, they would send a packet to the employee with a copy to keep and a copy to file. One day Nils came to my desk with a notice from the IRS saying he had not filed his tax return. I was confused because I know Peat Marwick had completed the return. I followed Nils to his desk. He pulled out the packet and both returns were still there. I asked him why both returns were still in the packet. He said that he read the words FILING COPY to mean that he should file it in his drawer. The IRS was not amused with our explanation, but they did waive the penalties.
I got creative while I was Treasurer. The US entities were originally incorporated in Pennsylvania. I researched the benefits of Delaware and convinced my boss to set up a Delaware Holding Company and incorporate all the entities in Del. We funneled all the intercompany loans through the Delaware Holding Company eliminating the taxes on interest in the US. We had the Property company charge enough rent to the Retail company so that the Retail company wouldn’t generate a profit. Without breaking any laws we were able to eliminate millions in state taxes. To give this whole sham some substance, we needed to have a real office in Delaware. Wilmington Trust was in the business of leasing out fake offices to all the Fortune 500 companies. For about $20,000 per year, you got a itsy bitsy office on one of their floors, a phone number, and if someone called the number, the one secretary on the floor would answer it as IKEA. The Gap had the office next to ours. To give it more substance, I grabbed Alan & Arn from the office and we trucked down some crappy white furniture from the store and spent a morning building it with our allen wrenches.
There were various other tax deals we did. Our Elizabeth, NJ store was built on a toxic waste dump, so they gave us a sales tax reduction. Whenever something orange would start bubbling up from the site, we’d cover it up and dig someplace else. The light poles vent methane gas. We financed this building with a REMIC that saved us millions in taxes over 10 years.
So yes, IKEA does avoid taxes, just like every corporation in the world.
Now onto the final chapter of how the 11th richest man on earth inadvertantly ended my career with IKEA. My 3rd role at IKEA was Real Estate Controller/Strategic Planning. IKEA decided to launch a massive expansion plan in the US and Canada starting in 1998 with the Schaumburg store in Chicago. My job was to control the billions that were being spent, figure out where to put the stores, figure out what the sales would be, figure out the profitability and ROI for each project, and sell each project to the head honchos in Europe. I had the time of my life, for awhile.
The camaraderie from 1998 through 2002 was the best I’ve ever seen. We were a well oiled machine. I handled the numbers and my opinion was respected and listened to. We had great team building adventures in Banff Canada where my first time skiing was on the Olympic downhill at Lake Louise. During this same trip, we went on dog sleds. I watched as our Construction manager knocked Mike off the sled and down a hill. Watching my 260 pound boss chasing a dog sled while making sure his pants didn’t fall down was a priceless sight. It was during this time frame when Ingvar announced that on an upcoming Saturday, the worldwide employees of IKEA would equally share the sales for the entire day. Not profits, but sales. This would benefit the lowest paid employees the most. Everyone in the main office went out to a store. I spent the day in Elizabeth NJ pushing carts for 12 hours. Every employee received a check for $2,300. Morale was at an all-time high.
Then something started to go off course. The CEO in Europe was convinced that a concentration strategy with multiple IKEA stores in each market would be a homerun. It was the Wal-Mart and Home Depot strategy. One problem. Ingvar insisted that every store be larger than 300,000 sq ft. IKEA stores are destination stores and draw from 40 miles away. During this time MikeinAz was my right hand man, handling all the accounting for the $1 billion or so we were spending.
I had worked with a brilliant guy named David Rogers to develop a regression model to predict IKEA store sales based upon population, furniture sales, number of college educated in the population, and a few other criteria. The model was highly accurate. The model would also calculate cannibalism on existing stores, if you put a new store too close. This is where things went downhill. A concentration strategy with very expensive 300,000 square foot stores didn’t work. I couldn’t get the numbers to work. When I modeled various scenarios, profits declined. The ROIs on the proposed projects weren’t high enough. The rocket scientists in Europe wanted 8 stores in NYC, 8 stores in LA, 4 stores in SF, 3 in Phila, 4 in DC, 7 in Toronto, 4 in Chicago, and 4 in Boston. I couldn’t even get 2 stores to work in Phila, let alone 8 in NYC. It just didn’t work.
Enter Pernille Lopez, former HR manager, and now CEO in 2002. Whenever you discussed facts and figures, her eyes glazed over because she was a clueless moron. I was reminded of the Far Side cartoon, replacing Ginger with Pernille, when trying to explain numbers to her.
Pernille hated my boss. My boss hated Pernille. Our organization was able to open 9 stores in the space of 8 months, on time and on budget. The sales projections were on target. This didn’t matter to Pernille. She surrounded herself with yes men, toadies, suckups, and diversity lackeys. The only people who told her the truth was the Real Estate group. I spent hours trying to explain that opening huge stores 20 miles apart would not be a profitable strategy for IKEA. She said if the numbers didn’t work, then I should change the assumptions so that the numbers did work. This went against every instinct in my body.
The company plunged ahead with their concentration strategy despite my warnings and misgivings. The strategy was rolled out in Phila, Washington, Toronto, SF, and LA. Eventually my boss decided to hit the road on his own terms. That left me and all the guys he hired hung out to dry. My new boss was a Swedish political animal with 25 years at IKEA under his belt. He acted supportive, but I knew he would throw me under the bus if necessary. There were still some people in the company who wanted the truth. They asked me for an analysis of the concentration strategy, how well our model worked, and the profitability. I produced a scathing 20 page powerpoint that bluntly and factually assessed the concentration strategy. My projections were accurate. The stores cannibalized each other. Profits plunged. There was the semi-annual Board meeting coming up. I gave the presentation to my boss and I sent it to some of the financial guys in Europe. They appreciated my analysis and concluded I was right. My boss decided to not show it to Pernille and the guys in Europe did nothing more with the report. None of the information was presented at the Board Meeting. I filed it in my drawer and tried to keep my head down.
This is where my old friend, Bjorn the lush, came back into my life. Being Ingvar’s nephew was good. After he left IKEA NA, Ingvar gave him his own franchise store in Seattle. Him and his partner Anders did a fabulous job in Seattle getting sales up to $125 million and raking in millions of profits for themselves. Things were getting so good, they were being pushed to open a 2nd store. They asked the CFO if anyone had any data about 2nd stores in markets. Don told them I had done plenty of analysis. Bjorn contacted me and asked if I had anything I could share with them. I still liked Bjorn and sent him my 20 page analysis. Him and Anders were practical guys. They loved the presentation and thanked me for helping them. I was glad to help and didn’t think about it again.
Months went by. Then the shit hit the fan. My boss came up to my desk one day and asked me to come into the conference room. He informed me that at a Worldwide Board meeting while the worldwide CEO was presenting the results of the expansion Ingvar suddenly whipped out my 20 page presentation and confronted the CEO with my conclusions. Evidently it wasn’t a pleasant scene. Anders, the worldwide CEO, called Pernille and yelled at her. Pernille grabbed my boss – Dan, and yelled at him. And as we all know, shit rolls downhill and it was shortly all over me. Dan asked me how Ingvar Kamprad ended up with my 20 page report. I honestly was flabbergasted. At that point I had no clue. I started contacting everyone who had seen the report to figure it out. A day later the culprit was found. My old friend Bjorn had come back into my life. It seems he and Ingvar are very close. They talked every day. Ingvar was complaining to Bjorn that this concentration strategy didn’t seem to be working. Bjorn said that he knew. He mentioned that he had an analysis from the US that came to that conclusion with facts to back it up. Ingvar asked to see it. Bjorn initially refused, but Ingvar promised not to use it for any other purpose. Bjorn relented and faxed it to Ingvar. It seems Ingvar lied to Bjorn. He used the report to pound the shit out of the CEO.
Bjorn sent an email to the CEO and Pernille apologizing and asking them not to blame me. Too late. The cat was out of the bag. I became a pariah. No one looked me in the eye. I was no longer invited to meetings. My roll was scrutinized and reduced. I had given over a decade of my life to IKEA and now my life was becoming a living hell because I tried to do what was best for IKEA. It ate me up inside. I knew that Pernille wanted me gone, but I tend to be somewhat of a prick sometimes. I wrote a scathing six page letter to Ingvar Kamprad detailing the crap that had been going on in the US since Pernille’s reign of error began. I didn’t send it, but I let it be known to some of the back stabbing psychophants that surrounded Pernille that I was ready to use it. Thus began my departure negotiations. People I thought were my friends had turned on me because they wanted to keep their jobs. In an odd turn of events, the HR manager (a diversity hire later fired for doinking his assistant) asked me to write a letter to him with my proposal for a separation amount. Pernille wanted me gone at any cost, but knew that I had done nothing against the company. Let’s just say that my severance was beyond my expectations. I signed the papers, walked out of the building over to Rosenbluth Travel and booked an 8 day vacation in Disney World at the Polynesian Resort without telling Avalon or the kids. We had the best vacation of our lives.
The next few years were unsettled, but ultimately I’ve found relative peace with this portion of my life. It was a wild ride. The 11th richest man on earth ultimately ended my career helping him become the 11th richest man on earth.
TBP members MikeinAz, Skinny and Robmu1 can confirm just about every detail in this sordid story.
Is the secret of Ikea’s thrifty founder out of the box?
The empire set up by Ingvar Kamprad is accused of siphoning billions into a tax haven
By Tony Paterson
Ingvar Kamprad, the 84-year-old founder of Ikea, has a legendary reputation for thriftiness, despite being the 11th-richest person on the planet. But Swedes have been shocked by recent revelations which suggest that Mr Kamprad may have taken his parsimony a step too far. It is alleged that he has been secretly running his empire via a Liechtenstein foundation, which is alleged to help Ikea avoid millions in tax. It is perfectly legal.
Mr Kamprad, who now lives in Switzerland, has insisted that he and his family no longer have any control over Ikea. But a television documentary by Sweden’s SVT channel alleges that he “secured control and power over Ikea and… created a foundation in one of the world’s tax havens – Liechtenstein”.
SVT claims in its two-part programme that there are two faces to Ikea – one public, the other. It maintains that Inka Holdings, the company that runs Ikea’s 280 stores around the world, is the corporation’s public face. The other, it claims, is a Liechtenstein-based holding called the Intergo Foundation, which was set up 20 years ago.
The documentary claims that Intergo and its Luxembourg-based subsidiary, Inter Ikea Systems, own the royalty rights to every single product the furniture giant sells. “Inter Ikea is the real Ikea,” the SVT programme insisted. It is alleged that 3 per cent of all Ikea sales were siphoned off to the Liechtenstein foundation in royalties which had allowed the concern to amass funds totalling 100bn Swedish kronor (£9.7bn). Mr Kamprad declined to be interviewed for the documentary. However, just before the programme was aired last week, he issued a statement admitting that he still had some control over Ikea via the foundation, whose existence had hitherto been unknown. He insisted that the foundation was run by an independent board.
“Its mission is to invest in expansion and business deals and to secure the long-term survival of Ikea,” Mr Kamprad said. He flatly denied allegations that the foundation’s aim was to avoid tax and insisted that Ikea paid all required taxes. “However, we have always looked at taxes as a cost, just as any other cost that comes with doing business,” he said.
Insisting that there was nothing wrong with trying to be tax-efficient, Mr Kamprad concluded in his statement on the Ikea website: “An optimised tax structure gives us the possibility of flexibility in using our assets that have already been taxed in one market. They can be used in new markets for further business development without the additional burden of double taxation.”
In Sweden, the allegations have dented the image of one of the country’s best-known companies, which had enjoyed a reputation for scrupulous corporate responsibility. Questions are being asked about why Ikea has resorted to using a notorious tax haven like Liechtenstein.
And it is not the first time that Mr Kamprad has faced embarrassing disclosures about his activities. In 1994, Swedes were shattered to discover that their iconic business entrepreneur had been a member of the country’s wartime pro-fascist New Swedish Movement, which raised funds and recruited members until 1945. The allegations emerged after the publication of letters written by the Swedish fascist Per Engdahl, who died that year. Mr Kamprad remained a friend of Mr Engdahl until the early 1950s. In a letter to Ikea employees in 1994, Mr Kamprad described his membership as “the greatest mistake in my life.”
He is thought to have acquired his youthful fascist leanings from his widowed German grandmother, who came from the formerly German-speaking Sudetenland region of what is now the Czech Republic. She regarded the Nazi annexation of Sudetenland as a liberation.
When Mr Kamprad was only a boy, he started selling matches to neighbours from his bicycle. He subsequently sold fish, Christmas tree decorations, pencils and ballpoint pens. When he was 17 his father gave him some money for passing his exams and he used it to set up Ikea, with the family farm as his base.
The company’s name is made up of the initials of Mr Kamprad’s name, the name of the family farm, Elmtaryd, and the nearby village of Agunnard. But Ikea’s low prices undercut the Swedish cartel of the time and the company was boycotted. Mr Kamprad turned to Polish producers for inexpensive furniture components that could be assembled at home from flat packs. The Ikea as we know it was born.
With 280 stores and 127,000 employees in 38 countries, Ikea has become a global empire. Company doctrine is enshrined in Mr Kamprad’s The Furniture Dealer’s Testament, which many refer to as the “Ikea Bible”. The tome is peppered with maxims such as “wasting resources is a mortal sin at Ikea” and “only when sleeping does one make no mistakes”.
A study London University released last week provides a revealing insight into the Ikea doctrine. It found that the vast maze-like interiors of Ikea stores were deliberately designed to confuse customers, who were therefore more likely to make irrational snap purchases of the household items they came across.
Mr Kamprad moved to Switzerland in 1976 to avoid Sweden’s punitive wealth taxes. He drives a 15-year-old Volvo 240, rarely wears a suit and is known to haggle for bargains in his village near Lausanne . He even admits to popping into Ikea stores to get a “cheap meal”.
The miserly reputation is, in part, a deliberate attempt to enhance Ikea’s value-for-money image. Less known is the fact that Mr Kamprad owns a large country estate in Sweden and a vineyard in Provence. He also drove a Porsche for several years.
Company savings policies are what drives his determination to always fly economy class. “How the hell can I ask people who work for me to travel cheaply, if I travel in luxury?” he once asked in an interview. “It’s a question of good leadership.”
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