IKEA apologized on Friday for using the forced labour of political prisoners in communist East Germany to make some of its furniture during the 1980s.
Victims of the German Democratic Republic's (GDR) Stasi secret police watched as a senior executive of the Swedish giant acknowledged for the first time that it had failed to act when rumours of prison labour emerged.
"Despite IKEA's attempts in the 1980s to prevent the use of political prisoners in making its products in the GDR, political prisoners were used. As the representative of IKEA in Germany, I offer my deepest regrets to the victims," said Peter Betzel, the company's country manager.
Embarrassed by media reports, IKEA, the world's largest furniture retailer, launched an internal investigation a year ago into whether it had used forced labour in the GDR until the fall of the Berlin Wall in 1989.
It handed the investigation to auditors Ernst & Young in May to ensure greater objectivity.
The presentation of the report took place a few metres from Checkpoint Charlie, one of the landmarks of the division of Berlin during the Cold War, where former Stasi prisoners said they hoped the study would lead to financial compensation.
"It's not about getting compensation just from IKEA but from all the companies who played a role in this," said 62-year-old Rainer Wagner. IKEA did not touch on the issue of compensation, although it said it would consider funding further research into the whole issue of forced labour.
Mr. Wagner was jailed after attempting to flee the GDR in 1966 and was forced to work in a factory producing gas meters. Some of the firms involved were privatised after reunification, he said.
Other former prisoners told of being thrown into isolation cells and fed on punishment rations for failing to reach productivity targets at factories working for Western companies, including IKEA and other household names.
Thousands of firms from then-West Germany and other Western countries subcontracted production to state-controlled firms behind the Iron Curtain, attracted by the low labour costs.
IKEA's investigation was prompted by Swedish and German news media reports that included interviews with former Stasi prison inmates. Some reports said there was evidence of the use of forced labour as early as 1984.
The auditors deployed forensic investigators, compliance experts, historians and journalists to study tens of thousands of documents from Stasi and IKEA company archives, and interviewed hundreds of IKEA staff and former GDR prisoners.
The investigators also looked into media reports that IKEA had produced furniture in communist Cuba using the forced labour of political prisoners. But they found this affected only a sample of sofas, which did not meet IKEA's quality standards.
The head of the present-day German federal authority charged with curating the Stasi's archives and investigating its crimes, Roland Jahn, said it was yet to be seen whether IKEA's probe went far enough.
IKEA has 338 stores in 40 countries. Founder Ingvar Kamprad, an 86-year-old billionaire who lives in Switzerland, still controls the group with his family and is no stranger to controversy, having been involved with a Swedish fascist group in the 1940s.
IKEA got into hot water this year for spying on employees in France and air-brushing women out of catalogues meant for Saudi Arabia.