Former IKEA top manager confessed in crimes committed in Russia

Former IKEA top manager confessed in crimes committed in Russia
Joaquim Wirtanen

IKEA St. Petersburg former manager Joaquim Wirtanen told law enforcement agencies how he gave a false testimony and took part in criminal case initiation against Moscow businessman Konstantin Ponomaryov.

Joaquim Wirtanen made a full confession to the Head of MIA Investigations Department Alexandr Savenkov as early as May 18, 2016. However, according to Fontanka, it has become known only now. The date, as the media reports, had been specifically chosen; it was May 18 that the State Duma adopted the bill "On active repentance”. According to it, voluntary acknowledgment of guilt and assistance in crime solving exempts the citizens, who have committed a crime of minor or moderate severity for the first time, from criminal liability. June 2, the bill was approved by the President Vladimir Putin.

Joaquim Wirtanen confessed to the investigative committee that he gave false testimony under the cases related to the conflict between IKEA Mos LLC (the company is engaged in trade and real estate) and Konstantin Ponomaryov’s business structure Sistemy avtonomnogo energosberezheniya (Autonomous Energy Saving Systems) in the period from 2011-2014.

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Photo: Konstantin Ponomaryov (by Gennady Gulyaev / Kommersant)

In 2008-2010, while being the general manager of IKEA for St. Petersburg and the Leningrad region, Virtanen took part in company’s legal proceedings relating to the rental of diesel power plants for the needs of Mega Parnas and Mega Dybenko complexes.

After planning to open the biggest Mega trade complex in St. Petersburg, IKEA was faced with insurmountable difficulties in this city. As a result, the first IKEA store located on Leningradskoe shosse in the Moscow suburb of Khimki was opened in 2000, Mega Teply Stan began its work in 2002; two years later, Mega store was finally attached to IKEA in Khimki. Meanwhile, there was no development in St. Petersburg. The reason was the local authorities’ inability to negotiate on connection of the trade centers to electricity. That was when Ponomaryov came to the rescue of the Swedes with his mobile diesel power plants (DPP). Although, realizing the hopelessness of IKEA’s situation, Ponomaryov set a sky-high rental price. As a result, in 2007-2008 the Swedish company paid 25 billion rubles for using DPP. In 2009-2010, Ponomaryov demanded about 40 billion more, referring to the additional agreements. This was despite the fact that the revenue of IKEA Mos, which owns 11 giant Mega complexes across Russia, amounted to 17.5 billion rubles in 2010.

It is noteworthy that diesel power plants had been at first used only during construction, before the stores connection to the distribution utilities. However, the negotiations with Lenenergo were constantly delayed. As a result, Mega-Parnas store, opened in 2006, had to operate using the energy produced by DPP, the average price of which was 4-5 times higher than that produced by an electricity substation.

Ponomaryov continued to make use of the beneficial situation. In October 2006, IKEA Mos and Konstantin Ponomaryov’s ISM LLC signed two generator lease agreements for two sites. In 2007-2008, additional agreements were signed. Later, the Chair of IKEA Mos’ Board of Directors admitted that the agreements had been drawn up in such a way that it was impossible to determine the final cost of services, but there was no other way for the Swedes at that time.

None of the agreements specified the number of diesel power plants leased by IKEA Mos. The lease price was calculated based on 1 kW generator idle capacity per day, regardless of whether or not it was in working condition.

In July 2008, IKEA Mos decided to end the relationship with Ponomaryov.

“I was told to remove the DPPs, refuse from the collection of lease payment, and terminate the agreement before its expiration date. I did not accept it. It was not as though they paid the money due and some extra compensation; there would be no problem in this case,” the businessman explained to Fontanka. The court proceedings began. During the arbitration and criminal proceedings, the company claimed the additional agreement was forged. Virtanen testified in favor of his former employer. IKEA could not rebut Ponomaryov’s accusations.

Now there are new circumstances of the case. Virtanen explained changing of his testimony by the fact he wants to “do what he can to help the law enforcement authorities.” He also points to another important argument, namely the murder of the lawyer Dmitry Kurochkin in Finland. This became known in January 2016. It was Kurochkin, an employee of a major UK-based company Herbert Smith, who was preparing an amicable agreement on behalf of IKEA, which enabled Ponomaryov to submit an extra claim in addition to the 25 billion he had already received. As a result, the amount, which had been increasing by 0.1 % of the initial amount, reached 120 billion rubles by mid-2016. As a matter of fact, this was a half of IKEA’s global net profit in 2015.

“I figured I should quit dragging it out, because by hiding the truth, I was acting as an undesirable witness of IKEA’s illegal activities in Russia, and I do not want to be next on the list of victims,” said Virtanen.

Confessions of the former top manager provide perspective for new high-profile cases. Ponomaryov is also preparing for them. The businessman has registered in the Anosov village, Krasninsky district, Smolensk region. It is the Krasninsky District Court, which is considering his claims under the previous relations with IKEA.  

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