In fear of his life: Ikea's man in Moscow tells of threats and bribes

Russia's "Wild East" image as a place where doing business can cost you your life as well as your life-savings was resurrected yesterday by the head of Ikea's local operations who claimed he was living in fear of his life.

Russia's "wild East" image as a place where doing business can cost you your life as well as your life-savings was resurrected yesterday by the head of Ikea's local operations who claimed he was living in fear of his life.

Lennart Dahlgren suggested that Ikea, the Swedish retail giant which is the largest foreign retail investor in Russia, was being blackmailed for bribes by corrupt officials who were blocking the opening of a new shopping mall in the crucial run-up to the new year.

Mr Dahlgren, a Swede, did not spell out exactly who had threatened him but hinted that Ikea had run into problems because it had refused to hand over bribes to officials, who routinely supplement their miserly salaries by extorting money from the people they are supposed to be helping.

The situation came to a head last Friday when Ikea was supposed to open a new superstore on the outskirts of northern Moscow as part of an R7bn (£130m) shopping complex called Mega-2. Scores of guests were invited, including the Swedish and German ambassadors. At the last minute, however, local authorities intervened and ordered the firm to cancel the opening because the store was deemed to be "unfinished". It was the second time in a month that the opening had been cancelled. The authorities alleged that Ikea had failed to make good on a series of investment obligations, including building a road junction and making an underground gas pipe safe. Ikea claims it has not been able to comply with such demands because the same authorities have repeatedly denied it planning permission.

Mr Dahlgren told the daily Izvestia yesterday he was now frightened for his safety. "I fear for my own life. I don't understand what is going on and I consider the current situation to be sabotage - against Russia," he said. "You need to have a certain amount of courage to speak out about an unfair situation that has been created by the authorities."

Though cagey about the precise nature of the problem in Russia, Mr Dahlgren has spoken openly about it in Sweden. "Like all Western companies [in Russia] we're subject to blackmail, sabotage and pressure for bribes. In many cases we're totally in the hands of local chieftains. Ikea is big [in Russia] and doesn't pay bribes."

That Ikea has gone public with such complaints is unusual. It was the first Western retailer to enter the Russian market after the country's financial collapse in 1998 and has opened four stores since, despite the fact that it has yet to turn a profit because of a crippling 25 per cent import tax.

Ikea's Swedish founder, Ingvar Kamprad, tends to talk about Russia as a missionary would talk about a wayward parish. Recently he said he felt it was his duty and "social mission" to supply the "poor Russians" with good things. Russians may not always have the spending power of their Western counterparts but they have flocked to Ikea in record numbers, prompting the firm to pledge an investment of at least R80bn and the opening of 17 new superstores in the next few years. Next year the firm is expected to break even or to make a small profit for the first time.

Russia's business climate is considered safer than it was in the 1990s, but bribery remains a core part of doing business here and Russian businessmen are still regularly shot by rivals in order to settle a score or win new market share.