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Posts Tagged ‘corporate misbehavior’

Ikea Sorry for Using East German Slave Labor

Ikea We love Ikea for its particleboard dorm-room tables, its interactive catalogs and its maze-like retail monoliths–masterpieces of psychological trickery designed to make it impossible for visitors to leave without walking past every single cupboard and toothbrush holder stocked in the company’s massive basement warehouses.

But this week we learned that Ikea hasn’t always been a group of good guys distributing meatballs and cheap full-length mirrors to Americans on a budget. While the company’s “official code of conduct” currently includes “zero tolerance for child and forced labor”, its European executives apparently didn’t feel any ethical qualms about utilizing prison labor in the 70’s and 80’s.

A recent report on Ikea’s past practices by auditor Ernst and Young–which the company requested after outside parties accused it of using slave labor–revealed that the workers who made some of the company’s signature furniture in its East German factories didn’t work by choice: they were prisoners who’d been sentenced to hard labor due to their political beliefs, which in most cases amounted to opposing the Soviet-backed Communist government after the post-war division of Germany. Seems like Ikea had a “don’t ask, don’t tell”-style arrangement with its Eastern partners.

Ikea can’t claim ignorance either; the Ernst and Young report found that company executives received tip-offs about the practice but did nothing to curb it.

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How Will the Public React to American Express’s Crimes?

The card that pays you back…after screwing you over.

Nothing hurts a brand’s public relations image more than charges of dishonesty, greed and manipulative behavior. This is exactly the PR mess American Express finds itself mired in today after agreeing to pay $85 million to customers it exploited–in addition to $27.5 million in civil fines.

Yep, that’s a $112.5 million penalty for treating its own customers like dupes. Richard Cordray, the director of the Consumer Financial Protection Bureau, explains in this Washington Post article that American Express violated laws designed to protect consumers “at all stages of the game — from the moment a consumer shopped for a card to the moment the consumer got a phone call about long overdue debt.”

As PR professionals, all we can do upon hearing this type of news is to throw up our hands and bang our heads on our desks. This is beyond inexcusable; it’s inexplicable. American Express, an iconic and trusted brand, must know better than this. The American people are fed up with corruption, particularly in financial institutions, and this type of news can eradicate decades of good will earned by consistency, diligence and hard work. American Express has come too far to act so recklessly toward the very people who allow it to be profitable.

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