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Corruption Of Western Corporations Has Been In The Making – A Swedish Example

Magazinul flagship H&M din Unirea Shopping Center

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Before the West lost its moral authority in the global corporate world, European companies enjoyed a higher level of credibility when doing business in developing countries.  Post-communist Eastern Europe was no exception to this phenomenon, when they looked to the West to learn how to escape from the Soviet veil that had long held sway over their lives.    

After the fall of the Berlin Wall and the collapse of the Soviet Union, Western companies were seen at the turn of the millennium as “saviors” of sorts, bringing rule-of-law, morality, and transparency to eastern economies corrupted by the legacy of communism.

In reality, Western corporations were beginning to resort to corrupt practices to gain access to these new markets. Foreign corrupt practices has long been a focus of Western law enforcement and policy.  However, as the enforcement effort lagged, Western officials began to turn a blind eye to and enable these practices.  

We want to focus on one developing Eastern European country that was squarely in the crosshairs of the c-suite during this time — Romania, a nation still trying to shake off the yoke of criminal behavior over the past two decades. 

Enter the famous fashion house of Hennes & Mauritz or H&M, and the multinational’s Chairman of the Board, Karl Johan Persson.

Persson, who in 2009 took over the company founded by his grandfather, is featured prominently in this story.  A Swede, he is worth approximately $1.5 billion, according to Forbes

H&M’s Chairman, Persson, is well connected to the Swedish aristocracy: Crown Princess Victoria attended his wedding in 2002 and she is also Persson’s daughter’s godmother.

In 2020, Romania’s GDP was less than $250 billion.  Sweden’s, by contrast, was over $500 billion, with half the population.  In the early 21st century, Sweden had not yet fallen to the policies of uncontrolled immigration and industrial stagnation and was known as an entrepreneurial powerhouse.  

Flashback to 2010, one year after Persson became H&M’s CEO and the company wanted desperately to enter the Romanian market to further its global brand in a new, promising market.  We have sources within the Romanian prosecutorial apparatus that point to alleged corrupt behavior by Persson — essentially the payment of a multi-million euro transaction (the prosecutors call it a bribe) to land retail space in a prominent shopping mall in the Romanian capital, Bucharest.  

The transaction was deliberate, and couched in the form of a “commission agreement” for broker services rendered.  However, the commission of 4 million euro was orders of magnitude larger than any rational real estate contract would stipulate.  With a total lease deal of approximately 20 million euro, a 20% commission is obviously not standard practice to broker a lease contract, no matter what market one is involved in.  Persson himself signed that commission agreement nonetheless as the reader can see below.  

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This sentence from information provided via the Romanian prosecutor’s office describes the transaction this way: Lease Contract no. 1649 was concluded between UNIREA SHOPPING CENTER SA, represented by Adamescu Carmen – general manager, Marina Leu and Bănică Andreea, and lonescu Eugen, as owner of H&M HENNES&MAURITZ AB, a Swedish company, registered with the Trade Register in Bolagsverket under registration no. 556042 – 7220, and having sole registration code SE556042722001, in its capacity as tenant.  

The commission agreement between tenant and broker, corresponding to the transaction referenced above, signed on June 23, 2010, reads: — (1) H&M Hennes and Mauritz AB, a Swedish company registered with the commercial registry maintained by Bolagsverket (The Swedish companies registration office) under registration number 556042-7220, unique registration code SE556042722001 having its headquarters located at Master Samuelsgatten 46A, in Stockholm (106-38), herein represented by Karl-Johan Persson and Jyrki Tervonen as members of the board…and SC Retail Group SRL…

But wait, there’s more.  The 4 million euro found its way from H&M, via a series of transactions, to the general manager of Unirea Shopping Center, now designated as a defendant by a Romanian prosecutor in a pay-for-play accusation.

Defendant Adamescu Carmen ordered the conclusion of a lease contract between UNIREA SHOPPING CENTER SA and H&M HENNES& MAURITZ by undertaking the payment by the prejudiced entity of an amount of EUR 2,500,000 for the space improvement by the tenant and without providing any payment of any amount to be made by H&M HENNES& MAURITZ to UNIREA SHOPPING CENTER SA at the time of entering the space/opening the store based on the agreed fix rent, for which such amounts to be acquired through RETAIL GROUP SRL, wrote the Romanian prosecutor’s office.

Another part of the prosecutor’s report reads — In order to enable Adamescu Carmen to acquire from RETAIL GROUP SRL part of the amount collected from H&M Hennes & Mauritz, i.e. an amount that should have been obtained by prejudiced entity UNIREA Shopping Center SA, Commission and Intermediation Contract no. CH001 was concluded, which was backdated, the date mentioned on it being that of 01.09.2010, 

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The case essentially shows a premier global fashion house paying an approximate 4 million euro suspicious transaction to the managers of a shopping mall to secure a prime retail location in Bucharest, the Romanian capital.  H&M’s space in the Unirea Shopping Center would become the company’s flagship store in Romania.  

We’re not done yet.

Romanian prosecutorial documents also show that the fully executed commission agreement between H&M and SC Retail Group SRL was created in September of 2010, a full three months after the lease deal was consummated even though that commission agreement was dated June 23rd, 2010.  

According to the Romanian prosecutor’s investigation report of H&M and the Unirea Shopping Center managers, the signatories of the commission agreement:  The document contains one sheet in French, representing a copy of a certificate concerning POLYMNIA AG issued by the Tax Administration of Zug Canton of Switzerland, from which it results that this company was registered on 09.09.2010. Taking into account that this company was registered on 09.09.2010, it is obvious that it could not have concluded a contract on 01.09.2010. 

Another sentence from the report reads: From an analysis of such document, one can see that it represents a working version of Contract CH001, and infer that it could not have been concluded on the date of 01.09.2010 mentioned in it. 

Further:  In order to enable Adamescu Carmen to acquire from RETAIL GROUP SRL part of the amount collected from H&M Hennes & Mauritz, i.e. an amount that should have been obtained by prejudiced entity UNIREA Shopping Center SA, Commission and Intermediation Contract no. CH001 was concluded…and backdated, the date mentioned on it being that of 01.09.2010, between POLYMNIA AG, having its seat in Switzerland, Zug, c/o DD Immo Service Plus GmbH, Baarerstr.75 6300, registration no. CH-280.3.915-3, represented by Marcel Schmid – acting as director, as agent, and RETAIL GROUP SRL, represented by director Dabija loan – Andrei, as beneficiary 

Polymnia AG is an offshore company registered in Switzerland using an agent as director.   

Having worked in the offshore financial business myself for two decades, traveling to these financial jurisdictions on a monthly basis, I can say with confidence, these entities are set up for   suspicious dealings such as this.  Ensuring a lack of transparency, even while being subject to financial disclosure laws, is the purpose of a web of offshore dealings.  

It appears SC Retail Group SRL did not want it disclosed to the public that the managers of UNIREA Shopping Center were receiving a kick back from H&M to accept a lease deal that the shopping center balked at in earlier talks between the two sides that went nowhere contractually.  The payment secured the deal for the new H&M CEO, Persson. 

We contacted H&M media relations for comment about this story, but as of the time of publishing did not receive a response from the company.

With a growing trend of corporate corruption we are seeing globally today, the question becomes — what is anyone going to do about it?

At the root of Western Civilization is the concept of accountability.  

Does accountability for corrupt behavior still exist?  

If not, then the loss of the West’s moral authority is complete.  

Western corporations should return to the objective of achieving a rate of return for their shareholders and upholding the rule of law instead of ensuring those stuck in post-Soviet criminality cannot find a way out for their developing societies. 

On another note, H&M has not fared well in recent years, with the New York Times describing a glut of unsold, unwanted clothes:  

What about a $4.3 billion pile of shirts, dresses and accessories? That is the problem facing H&M, the Swedish fashion retailer, which is struggling with a mounting stack of unsold inventory, wrote the U.S. “paper of record” in 2021.  

A few years ago, H&M Group (Hennes Mauritz AB) launched its sustainability report with fanfare. By 2030, the company aims to use only recycled or other sustainability sourced materials and by 2040 it wants to be 100% climate positive, wrote Forbes in 2018.

H&M’s heirs have pushed sustainability instead of working to stay ahead of fashion trends and effective distribution.  ‘Go woke, go broke’’ certainly applies here.  

Persson was replaced by Helena Helmersson as CEO in January 2020.

It is said the third generation of family wealth is usually what destroys the legacy a founder leaves to his heirs.  Perhaps the cliché rings true in this circumstance as well.  

L. Todd Wood is a former national security columnist for The Washington Times and now is publisher/editor-in-chief of CDMedia, a global media company with offices in Eastern Europe.

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