The company knew that parts for IKEA furniture were constructed using both political prisoners and criminals, according to a report from auditor Ernst & Young. The company also knew that the prisoners were being forced to work without compensation.
The report was commissioned by IKEA after the firm was accused of the practice in the German and Swedish media last year, The New York Times reports.
Many of the prisoners in question were imprisoned by the communist government of East Germany for being critical of the government and communism in general. Employees of IKEA visited the production sites during the time in question and, while concerns were expressed about forced labor, no action was taken to remove the work from those factories, the report says.
An IKEA spokesman said in a statement that the firm deeply regrets the events and that no use of forced labor currently is allowed by IKEA.
She went on to say that the firm would make a donation to groups doing research on forced labor in the former East Germany.