The retail giant IKEA is one of the world’s largest furniture makers, using one percent of the global wood supply each year to make about 100 million pieces of inexpensive, smartly designed furniture sold through its international network of stores.

Harvard University is the symbol of American intellectual and political power – producing eight US presidents and many of the leaders of American industry.

But for the past year, Harvard has been sitting in Romanian courts trying to keep control of national forest they bought. The state says Harvard bought some of its land from a group of figures that are under investigation for cheating the state. Subsequently IKEA bought the same forests from offshores controlled by Harvard’s investment fund.

To say these two global brands may have been duped may not be accurate. Unlike IKEA’s furniture, these deals are turning out to be neither smartly designed nor inexpensive for either organization.

How Ikea And Harvard Got Twisted In A Damaged Romanian Land Agreement 04 March

Starting in 2004, Harvard bought more than about 33,000 hectares (83,000 acres) of forest land in hundreds of small tracts through local intermediaries that Romanian prosecutors have since charged with corruption and organized crime activities or who are under investigation. The deal between Harvard and IKEA also followed an unusually complex route and was facilitated by another group of Swedish- and Luxembourg- based companies connected to, or controlled by, the American university.

Romanian authorities are challenging some of the transactions on the grounds that state-owned forests were illegally reclassified as private property through a restitution program designed to return nationalized land to its former owners.

A Romanian judge has already invalidated one property deed in Harvard’s portfolio, ruling that the forest was not acquired in good faith. Because the same group of suspected fraudsters bought much of Harvard’s land, it’s possible that many more tracts may end up being returned to the state.

And that is a problem for IKEA, which bought the land from Harvard and may lose some or much of its newly acquired Romanian woods as well.

Romania’s forest restitution program has been riddled with corruption and major scandals almost since it started. High-profile politicians, controversial businessmen and even a member of Romania’s royal family have been arrested and charged with corruption and money laundering in connection to the deals.

Forest restitutions grew out of Romania’s turbulent history in the last century, when the Communist regime nationalized private property nationwide and many people lost land that had been in their family for decades.

After 1989, new laws in the post-Communist Romania permitted former owners and their relatives to seek restitution for their lost properties. Sadly, these same laws created possibilities for fraud.

Crooked businessmen and dirty politicians seized the moment, forging documents and claiming forests that had by no means belonged to them or to their ancestors. In numerous instances, fake relatives armed with piles of forged paperwork claimed some of the last standing old-growth forests in Europe and rapidly sold them to foreign companies who poured tens of millions of dollars into such deals hoping for great returns.

Harvard University, through its investment arm, became a significant purchaser of Romanian forests starting in 2004, ultimately purchasing some 33,600 hectares (83,000 acres) of forest land regardless of longstanding rumors of corruption in the restitution program.

Then, in the finish of June 2015, Harvard University abruptly sold most of the land to IKEA. The deal was carried out through a series of steps that began in 2014 when Harvard first sold the land to a Romanian business owned by offshore businesses controlled by Harvard, and after that IKEA took more than ownership from the Romanian business.

IKEA paid much more than € 56 million (US$62.six million or $73 an acre) for about 98 percent of Harvard’s forest, the greatest investment in raw forests for the Swedish giant. The forests owned now by IKEA are scattered all over the country with the biggest concentration in the northeast. Harvard, which had paid more than $100 million for the properties, sold them for two-thirds of what they had paid in money, together with an agreement that IKEA assume an unknown amount of debt that Harvard had incurred.

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