IKEA has admitted that political prisoners in communist East Germany were forced to make some of the Swedish home-furnishings giant's products in the 1980s and apologised.
Ikea released a report by independent auditors Ernst & Young into allegations by the former prisoners that they had to make furniture and accessories in prison workshops. They were threatened with solitary confinement and other punishment if they refused.
Some Ikea executives were aware at the time, 25 to 30 years ago, that East German suppliers were possibly using jailed dissidents as labour along with regular criminals, the report said.
"We deeply regret that this could happen," said Jeanette Skjelmose, sustainability manager of Ikea, which runs self-service megastores round the globe selling stylish but cheap furniture of its own design.
In the 1980s, many western companies outsourced some of their production to East Germany, attracted by cheap labour rates.
"The use of political prisoners in production has never been acceptable to the Ikea Group," Skjelmose said.
"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."
Ikea ordered the study after ex-prisoners aired the allegations last year on German television.
The repressive East German communist government collapsed at the end of 1989 and within weeks, the political prisoners were freed.
Ikea said it would make a financial contribution to a history research project on forced labour in East Germany by a German group, UKOG, the Union of Organisations of Victims of Communist Despotism.
"There is no decision yet on the size of the funding. A dialogue is still ongoing with UKOG," Josefin Theorell of Ikea Group said in Sweden.
Ikea said the audit checked thousands of pages in archives and interviewed 90 retired or current Ikea staff and East Germans.
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