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Ikea founder admits to secret foundation

Ikea founder admits to secret foundation

Published: 26 Jan 2011 12:24 GMT+01:00
Updated: 26 Jan 2011 12:24 GMT+01:00

Ikea founder Ingvar Kamprad, considered one of the wealthiest people in the world, controls the company through a secret foundation worth 100 billion kronor ($15.34 billion), according to a Sveriges Television (SVT) report.

Despite the revelation, the company and Kamprad's image will probably not be affected, according to media advisors.

Kamprad controls the enterprise through a holding company called Inter Ikea by way of a secret foundation in Liechtenstein. The foundation is currently worth about 100 billion kronor, according to the latest episode of SVT's Uppdrag granskning investigative news programme, set to air on Wednesday evening.

Ikea is controlled through a complex network of different types of companies and foundations.

According to Uppdrag granskning, Kamprad, who has lived in Switzerland for over 30 years, created the foundation Interogo in Liechtenstein in the spring of 1989. The foundation is managed by the law firm Marxer & Partner.

In an email from Ikea sent to the TT news agency, Kamprad admits that the Interogo Foundation in Liechtenstein exists and that it owns Inter Ikea Holding SA, which in turn owns Inter Ikea.

"Interogo Foundation is a company foundation whose only goal is to invest in the expansion of the company business and secure its long-term survival. In other words, the assets of the Interogo Foundation are held as financial security and are only used if Inter Ikea has financial difficulties," wrote Kamprad.

"The assets can also be used to support individual Ikea dealers who have financial difficulties or for philanthropic purposes. Interogo Foundation is controlled by my family and is administered by a board of directors consisting only of outside representatives." he added.

Liechtenstein's rules and regulations are extremely closed. And the bylaws of the foundation clearly state that documents about the foundation cannot be shown to outsiders or foreign authorities.

Proceeds can be paid out through grants to individuals or organisations that work in architecture, as well as interior design and consumer products. Interogo currently has 100 billion kronor in equity, acting as a hidden fortune for Kamprad.

The regulations also clearly stipulate that the Kamprad family has total control over the executive board of Inter Ikea, which is registered in the Netherlands.

For many years, Kamprad has said that his influence over the company is limited and that a Dutch charitable foundation, Stichting INGKA Foundation, directed it.

However, it is Inter Ikea, which the Kamprad family controls through Interogo, that owns the rights to the Ikea brand, its concepts and all of the products sold in its stores around the world.

A large part of Inter Ikea's proceeds comes from the 3 percent in royalties on all sales that every Ikea store must pay to the parent company for the right to use the concept. These payments are tax-free and are amount to several billion kronor per year.

Ikea currently operates in 38 countries. In Sweden, the arrangement amounts to 100 million kronor a year in lost taxes, according to the report.

Through advanced tax planning, the company has implemented the system of royalty payments to dodge tax payments, according to Uppdrag granskning's report, which uncovered the jumble of companies within Inter Ikea registered in the Netherlands, Belgium, Luxembourg, Switzerland, Curaçao, the Virgin Islands and Cyprus.

Despite the revelations, media advisor Paul Ronge doesn't think the information will negatively affect the image of Ikea and Kamprad.

"There are extremely few brands that are considered icons in Sweden, but Ingvar Kamprad is one of them. If someone decides to go after Kamprad, it must be with something that will cause people's jaws to drop," he said.

During his media training sessions, Ronge often compares Kamprad with beloved Swedish children's author Astrid Lindgren and actor and director Hasse Alfredson.

"Ingvar Kamprad has been perhaps the most skillful brand builder in Sweden as he has built up his brand over a long, long time. That makes for a very strong immune system during crises," he said.

"The key issue is whether people think this is so remarkable, shocking and new that they are prepared to reconsider the image of Kamprad that the majority of the Swedish people have held over the last 40 to 50 years," Ronge pointed out.

When a reporter from the programme tried to confront Kamprad with the information, he became angry and asked, "How can you ask such idiotic questions? Are you crazy?"

"It is deplorable that Ingvar Kamprad had an outburst like that. It is so unnecessary. He did not have to end up in such a situation. One should not react emotionally and in the presence of journalists to show yourself getting so pissed off," said Ronge.

Ikea Sweden plans to comment the revelations presented by Uppdrag granskning on Wednesday and early on Thursday morning, Ikea Sweden will host a chat on its website, where CEO Peter Agnefjäll will answer questions.

TT/The Local/vt (news@thelocal.se)

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Your comments about this article

13:39 January 26, 2011 by engagebrain
The seriously wealthy don't want to pay their share of the tax burden.

Close the down the tax havens.
14:29 January 26, 2011 by Kalyissa
Just curious because I'm confused, does this mean that hes 10 billion dollars richer than previously though? So would make him 4th on http://en.wikipedia.org/wiki/Forbes_list_of_billionaires ?
14:41 January 26, 2011 by Nemesis
There is a simple conclusion to be made from this.

These people should be arrested and made to pay tax in every European country they have avoided paying tax in.

The rest of us have to pay tax, so should the owners of IKEA.
14:43 January 26, 2011 by voiceofreason
If you are bothered about this, you are either greedy or jealous. I have only this to say about Ikea founder, he is lucky, and smart. I wish him more luck.
14:47 January 26, 2011 by 2394040
This just confirms that the super-wealthy (or nobility, aristocracy, etc.) actually control what happens in the world. They also control the politicians; the ones you THOUGHT controlled everything!

No big surprise here.!
15:13 January 26, 2011 by Great Scott
IKEA is not the only company to do this, many others do as well. Conservative governments will do nothing about this either, it is companies such as this that finance the conservative crooks, legally and illegally. When things go wrong and conservative governments get caught they blame the workers.
15:17 January 26, 2011 by Mb 65
He has given employment to 1000's of Swedes. so what are the media on about. He can do what he likes with his company, and live where he wants. Sweden drives industries away with there high taxes. Do they think his company is the only one to have their companies registered abroad. Why do you think FORD and GM have got out of Sweden. How long do you think china will build cars here with the high wages and taxes not long that's for sure.
15:38 January 26, 2011 by countrysidedrive
How rich is rich? Billions and billions of dollars that is more rich than anyone will ever ever need to be. He is obviously very smart. Smart enough to know how to us the worlds tax laws so that he avoids paying taxes. He has done nothing illegal or so everyone thinks. Greedy Hell Ya! But why can he avoid taxes. Simple. It is because of the Golden Rule. The Golden Rule states that that those with the gold make the rules.
15:45 January 26, 2011 by foxpur
I have to agree with voiceofreason, there is no perfect system, rich want to remain rich.. no surprise.. there is nothing he is doing that technically violates any laws, and setting up a protection account system, ESPECIALLY in this current economy, for their business is hardly a bad idea.. his planning ahead can greatly support economy.

You complaining are just bitter because you didn't do it yourself.
15:54 January 26, 2011 by Taxlady
I have great reverence for Kamprad as a man with intellect and business strategy/vision and hope he creates as many foundations or whatever else he choses. It is his idea/concept, no one elses and his money.

He has employed so many people all over the world and as such ought to be admired. Let's face it, most of us are minions and a few have much more.But if the wealthy did not exist then the minions would not eat. We would also not be able to fund the public sector. The circle is clear.
16:02 January 26, 2011 by Youdee
I question the credibility of this article, which starts with "according to media advisors" BUT quotes only one. And the translation of the one media advisor's comment makes me wonder if he really used such strong words in Swedish?
16:27 January 26, 2011 by mikewhite
Just seems odd that the poorer you are, the higher the rate of income tax you must pay ...
16:59 January 26, 2011 by calebian22
Kamprad's money works for him. Big surprise! He is not breaking the law by being intelligent with his money. As others have stated, any complaints about this smacks of jealousy.
18:03 January 26, 2011 by GLO
Well done. In fact, he made this fortune. Not Sweden, Not Europe, Not you. Individuals pay tax on what thy earn, Trusts, other legal entity's can exist to do good things for future benefits decided on by the guy that made the money. All you other idiots can go make your own fortune or shut up. Oh! Dont forget to get in line for your welfare payment.
18:45 January 26, 2011 by Veronika Larsson
Anybody who thinks that Kamprad, the former Nazi (he was a member of the National Socialist Party until 1948) made his fortune all by himself has been reading too many corporate publicity releases.

The fact is, Kamprad used the infrastructure of Sweden--its schools, bridges, roads, ports, and electric and gas utilities, among other things--to build his fortune. There's a reason IKEA didn't get started in Malawi or Tunisia. There are many employees of IKEA whose talents in organization, manufacturing, distribution, and design, have made IKEA the success that it is. It's an insult to those thousands of people who have worked for IKEA over the years to say or imply that Kamprad built this all by himself and has sustained its success all by himself.

The fact is that Kamprad wants to keep all this money for himself and feels no apparent obligation to support the society that was the cradle of his business. It's ok for the workers of IKEA to pay their fair share of taxes, but Kamprad uses a complicated scheme of shell companies to avoid taxes, as many rich people do.

If this scheme is legal, then it ought not to be. Kamprad is no better than anybody else; he should have to pay as the rest of us do. Anyone who cries "jealousy" is really saying "Kamprad is so rich he is relieved of his social obligations". Good roads, schools, bridges, ports, and utilities don't come from thin air; they are paid for by our taxes.

I pay my share. Kamprad and others like him need to pay theirs.
19:41 January 26, 2011 by dizzy09
have only 2 words to say here, "tax evasion".
20:11 January 26, 2011 by Allseeingeye
Why do Swedes keep harping on about their "beloved" Ingvar Kamprad? The man himself loves the place so much, he has been able to stay away for many decades. Why should he pay for all of your "sick" days and lazy lifestyles? Here's the fact - if he cared for any of you, he would pay taxes or even donate for anthropological reasons. He doesn't care about you and won't pay. Plus, why should he pay a single kronor to sweden - what for - he doesn't live here and never will.
20:52 January 26, 2011 by Mb 65
If you don't like him stop shopping in Ikea. But i bet none will. I agree with allseeingeye.
21:45 January 26, 2011 by planethero
Kamprad & co earns money in socially responsible & burdened countries, syphons off to haven.

Money recycles in economies until these theives smuggle it out and call it "their own".

Disgusting.
22:16 January 26, 2011 by jack sprat
No question that Kamprad deserves credit for what he has achieved. Most Swedes are happy to think that the sun shines out of his R-sole, partly because of the Worldwide Ikea/Swedish image. However the fact that the guy was a prominent and active Nazi right up to 1948, despite all that had been happening in the meantime, speaks for itself. He had no choice but to publicly denounce Nazism in order to save his company when details of his background came to light worldwide. However most of those who have been closely studying him in recent years, believe that the leopard has definitely NOT changed it's spots. Furthermore they are not only convinced that his Nazi sympathies are stronger than ever, but that there are powerful question-marks regarding the true reason and purpose behind his massive fortune
04:04 January 27, 2011 by engagebrain
He is Swedish right up until the moment he is asked to pay Swedish taxes.
07:54 January 27, 2011 by red.king
"In Sweden, the arrangement amounts to 100 million kronor a year in lost taxes, according to the report."

Yet Ikea generates how much revenue for Sweden in employment tax and VAT? 10 Euro (approx 100m sek) is nothing but a drop in the ocean of taxes that Ikea pays. The holding company referred to has a specifc purpose to both ensure the financial security of the Ikea brand and also charity. What is the problem here?? He is ensuring that no element of Ikea is at risk of going bust and owing creditors and the indeed the tax man any money? This is responsible business practice and should be applauded.
08:09 January 27, 2011 by emmjazz
This sounds like a Steig Larsson story plot. Can anyone say 'Wennerstrom'?
11:43 January 27, 2011 by lili2010
Wow what a great brain! A very smart guy. It is his own idea and money and he can live where ever he likes and he should really be admired for his deed! We have only few such BRAINS in this world!
22:00 January 27, 2011 by Huh?!!
We can all say what we want about this, but the truth is, EVERYONE of us will do what any rich enough person will do and avoid paying high taxes. It's not just jealousy, we forget HYPOCRISY! Instead of crying over the millions of tax money lost, somebody in this country should take positive & active steps in DOing something instead. Make Sweden attractive enough to keep your rich & your sports folk! If lost tax money hurts so much, how the millions paid to the royal family for their upkeep? As a taxpayer, I feel it's like money down the drain! Ok, maybe history & what else plays a part in having a royal family, I say draw a line to their budget & they seem competent enough to earn bags of money themselves, let them cover the rest! How about them? The royal family? How do they move their money around? I'd look at the jobs Kamprad thru' Ikea, generates & shut up. Imagine if one day the Chinese were to also buy up Ikea, who would care about Kamprad's "millions of tax money" then?
05:43 January 28, 2011 by Garry Jones
I actually thought the icing on the cake was the "letter that arrives every month from Sweden". At age 65 he applied for his Swedish "folkpension" and receives it every month: paid for by the Swedish tax system that he is so successfully in not paying.

He has been able to maintain the image of IKEA being a Swedish company and himself being practicaly poor whilst managing to remove IKEA's rights to own its products and copyrites. In the meantime, what was implied in the programme is that he has amassed a major fortune through "tax free grants to architects" rather than salary. It would appear that the charitable and tax deductable "tax free grants to architects" are actually paid to Ingvar himself. but the TV programme stopped short of saying this so I am second-guessing this.

Would he had stayed in Sweden and paid in accordence with the rules if the taxes had been more humane? Possibly. Maybe it was Sweden's inhumane tax system that created this. Or maybe he would have done it anyway. It would be interesting to see the history of this prior to him moving to Denmak in 1973. Did he willingly pay all taxes until a "straw" broke him and he decided to never pay another penny (öre) in tax that he didn't have to.

The deal with "Preem" and the deal with "City Stormarknad" were simply ways of not paying tax. This type of deal should be outlawed.

But above all I feel he should have been more honest in the earlier interviews where he has lied about the set up. It was also ground-breaking TV for Sweden that has not had a history of this type of brilliant investigative tv reporting, more of the same please.
10:46 January 29, 2011 by Jools33
I've emailed this story to BBC's Panorama requesting they run a special on this - anyone else think that this sounds like an interesting program to watch - just email:

panorama.reply@bbc.co.uk

and link to this story. In theory the more requests they receive - the more likely they'll go with it.
20:59 January 29, 2011 by BobWas
Tax avoidance = legal

Tax evasion = illegal

Presumably he is practising tax avoidance - there's no law anywhere that states that you have to pay more than is due.
14:32 January 30, 2011 by JBjork
If a IKEA or anybody else makes money from business activity conducted in Sweden then that is where that income should be taxed. IKEA conducts business in other countries, and those countries have the right to tax the income where it is earned. It is not tax evasion to pay the taxes due on the income earned by the stores in the coutnries they are located in.

Do you expect IKEA or any other company to pay income taxes to two countries on income that is earned in only one? If every country imposes income taxes in this manner, then no company would have any income left - in fact companies would owe more in taxes than they make.

His foundation is no mystery, but it begs a few questions for all parties. It is clear that Kamprad knows how to build a successful company; is it possible that the laws in Sweden make it impossible to accumulate the capital? As for the royalties, that income is properly sourced to where it is earned and should subject to tax by those jurisdictions.

I do not work for IKEA or any other company. I love Sweden and invest in Sweden. I pay taxes on the money I make doing this. I do not want to be an adversary , only an advocate for the best for all. Perhaps it may be good to look beyond the old stereotypes of business and government and find a vision of the future that simply seeks to achieve propsperity. If both the people and the businesses are propsperous, then neither can fail.
18:03 February 7, 2011 by Lavaux
So what's the scandal? That IKEA conserves its corporate resources through efficient tax planning? Would the Swedish state spend IKEA's billions more wisely than IKEA? I seriously doubt it.

Does the Swedish state have some moral, legal or practical claim to the wealth that IKEA creates greater than IKEA's or its owners'? If so, what is it, and how is it fashioned?

All in all, this story makes me more favorably disposed towards IKEA and Ingvar Kamprad than I was before I read it.
20:31 February 10, 2011 by big5
A few weeks later we can conclude that Ronge was right. Kamprad's and Ikea's images have not been tarnished in the least. Instead there was a huge twitterstorm and public backlash criticizing the journalists for pestering an 85-year-old man who has probably done more for Sweden's positive image abroad than any other Swede in history.

The petty envy displayed by the journalists makes me slightly dyspepsic. We need more large companies to emerge in Sweden not fewer. But the lingering socialist mentality in this country is preventing new successes like Ikea.
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