Bribery issues halt Ikea’s Russian program

Pay to play is the name of the game in Russia. And Ikea is pulling out of the game by halting new investments. Its founder Ingvar Kamprad speculated in a radio interview that the company’s refusal to pay bribes had led to it being overcharged for electricity to the tune of millions of dollars.

The list of other complaints is long: a store opening ceremony halted minutes before kick-off because it was alleged the parking lot was too close to a gas main; another store in Nizhny Novgorod was closed for the holiday season for alleged fire code violations; and officials refused to connect Ikea’s first Moscow store to the electricity grid days before opening (leading Ikea to buy its own generators).

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2 responses to “Bribery issues halt Ikea’s Russian program

  1. Russian Bear

    So …. why the yields in Russia higher than in transparent markets? And … we do see a lot of similiar behavior in martured markets, e.g. Italy, Germany, Austria. The industry is the issue not single countries!

  2. Yertl the Turtle

    Don’t see your point, Bear. Everyone knows development risks are higher in Russia, and there’s so little of supply there anyway. Seems naturally that yields are higher. Real returns for serious risk, no?

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