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A New Course for IKEA MOS Shopping Center Company in Russia
December 15, 2010, 11:40 (PX Newswire)
As a result of several well known problems in IKEA Russian Shopping Center Company (IKEA MOS), the Management and Supervisory Board of IKEA Group have, since the beginning of 2010, been performing various reviews and improvement work in IKEA MOS. Focus has been on areas of construction, permits & licenses, corporate governance, leadership and culture. The reviews have been conducted by external experts such as KPMG, Ernst & Young, PwC, engineering companies SWECO and COWI, Swedish law-firm Hammarskiöld & Co, as well as by IKEA resources. The general investigation phase is now completed and closed.
The reviews show large deficiencies in several areas. Intensive work to correct the deficiencies has already begun and will continue with full intensity. A new Managing Director of IKEA MOS is, since October 1st, in place to build management and compliance routines based on IKEA values and policies.
Russia continues to be an important market for the IKEA Group, with business potential in the areas of retailing, purchasing and production.
Ingvar Kamprad, the founder of IKEA, has always been an active supporter of IKEA expansion in Russia. Ingvar Kamprad has, throughout the years, shown a personal interest in IKEA Russian business and tried at his best to encourage a speedy build-up of shopping centers with IKEA stores in Russia.
“The documented general disorder inside our Russian shopping center company is totally unacceptable”, says Ingvar Kamprad. “I have been over-optimistic. It is shocking and sad that our organization got carried away. For this, I realize that I have a moral responsibility. I am confident that IKEA will continue to help improving the everyday life for the many Russians”, says Ingvar Kamprad.
Deficiencies have been identified within the following areas:
* The external reviews regarding constructions show a number of serious issues in some of IKEA MOS’ shopping centers. All buildings have been viewed as safe, provided that certain recommendations and routines are followed. IKEA MOS is following these recommendations. Improvement works in buildings have begun and will continue.
* The operating permit in Adygea is missing due to unsolved infrastructure matters outside of the shopping center. An agreement with the local Government to resolve this matter has been made.
* Proper routines for obtaining licenses, documentation and filing are in general not up to standards in IKEA MOS, but are currently being implemented.
* Several reviews show an insufficient level of corporate governance and internal control within IKEA MOS. Efficient routines and controls are being put in place according to IKEA standards.
* An Independent Review committee for Human Resource, investigating the leadership within IKEA MOS, has revealed several cases of unsatisfactory management practices, both on an individual and on a general level in IKEA MOS. These issues are currently being handled.
* Accusations of unethical business behavior have been reviewed. There are indications that within IKEA MOS there has been a culture of accepting third parties who have engaged in unethical business practices. As a result, IKEA MOS is now strengthening its compliance and control mechanisms in this area.
* IKEA MOS has been involved in complex legal disputes regarding diesel equipment and supply in St. Petersburg. The parties have now, with the support of the Russian government, reached a settlement.
The new Managing Director of IKEA MOS Russia, Per Wendschlag, is together with his management team and support functions from other IKEA units implementing IKEA routines and strengthening the IKEA culture in IKEA MOS.
“We see great business potential in Russia and are here to stay. Right now we have some homework to do, and my focus is to create a proper business set-up, based on the IKEA values, also in IKEA MOS”, says Per Wendschlag.
The IKEA Group has 12 Mega Shopping Centers and 12 IKEA stores in Russia with 200 million visitors per year, with the plan to open 2 more Shopping Centers and IKEA Stores during 2011.
For further information, please contact:
Media Relations, the IKEA Group +46 709 936376