Sunday, June 10, 2012

Ikea's former CEO regrets Ikea's use of tax havens

Peter Day on the BBC's World Business programme has a long interview with Anders Dahlvig, former CEO of Ikea, where he addresses the issue of the company's quite widespread use of tax havens. He expresses some regret at this now:
"Being a Dutch company and a Dutch foundation - I don’t think is a problem, but some of the sister companies evidently have some structures in tax havens that are not so well seen today. You also have to see this in a historic perspective: when these setups were made in the 1970s and 80s, the public view of tax havens was different from what it is today.
. . .
Now people look upon these setups very differently and think it is morally unjust. However, if you have that setup it is not that easy to change, that is why many now are sitting with something they may not really want, but can’t really do anything about."
Which, among other things, underscores our point about how hard it is to tackle this gigantic faultline in global capitalism, and why we believe that widespread public anger about the scandal is essential if we are going to see serious change.

For more background on this, see this FT summary last year of a Swedish investigative look at Ikea's structure:
The revelations by a team of Swedish investigative journalists have prompted Ikea to acknowledge the existence of a previously undisclosed foundation in Liechtenstein that controls a key pillar of the chain’s complex ownership structure.
. . .
Stellan Björk, one of the investigative journalists, said the Liechtenstein-based Interogo Foundation was the “missing link” that proved Ingvar Kamprad, Ikea’s founder, still held ultimate control of the group. Ikea confirmed that Interogo was controlled by the Kamprad family and that it owns Inter Ikea Group, which in turn owns the Ikea trademark and receives royalties from every Ikea store."
Dahlvig had this to say about the structure:
"I think he [Kamprad] probably controls it all, but that is not the same as being able to sell it and take out the money. As far as I know, everything stays within the company structure and must be reinvested in one way or another, and through this foundation structure that he has, my belief is that he cannot really sell it or take any money out of the business - as he says."
And then, on the issue of bonuses and pay, he disagrees sharply with the financially-focused Anglo-Saxon models:
"There are very limited bonuses at Ikea: it’s always been plain salary, mainly. I’ve always been of the opinion that the financial remuneration should not be the main motivator for anyone wanting to work for Ikea. So the policy has always been to place ourselves in the middle of the pay scale, not at the top end. If you attract only the people who are attracted to money primarily, they will move on to the next thing as soon as someone pays a penny more, so you need to attract them with something else. In my view the main competitive advantage you have in the labour market is your value system. You have to have something where people feel attached to the company and want to say, it responds to their deep value. It has worked. You need to have a value system that is credible, not just written on a piece of paper, and that everyone lives by.
OK, that's not of direct relevance to the Tax Justice Network, but it's interesting. (Today the FT is also reporting changes to the ways some financial institutions in the UK are thinking about pay structures - to make their remuneration more long-termist, but that's different.) Dahlvig thinks this competitive advantage may be rising in importance too:
"Twenty years ago people accepted that the business of business was business: make money for the owners and provide jobs in the process; that is about all. It has changed, today, there is a lot of research backing that up: most people are stakeholders and most people today expect business to take a much broader responsibility in society than just make money for the owners."

That, of course, is of very great relevance to us. And given the current crisis of capitalism, this trend can only grow stronger.


Anonymous Anonymous said...

This is not a crisis of capitalism. You all this capitalism? The only crisis going on is the overreaching cancer called government which will never be satiated.

8:59 am  

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