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IRAN: Officials shut European cosmetics firm Oriflame's offices, arrest 5 employees

August 23, 2010 | 12:45 pm

Iranian security officials shut down the local office of European cosmetics firm Oriflame in northern Tehran over the weekend and arrested employees for alleged illegal activities, including running a pyramid scheme, an Iranian media report and company officials said. Picture 2

Oriflame’s chief financial officer, Gabriel Bennet, told The Times in a phone interview Monday that three full-time employees and two sales consultants had been arrested Sunday at the company's offices in Tehran. Two of the employees are Iranian citizens while the third carries dual Swedish-Iranian citizenship, Bennet said. The two sales consultants are both Iranian citizens.

The charges against the company are vague. The Fars news agency, affiliated with the Revolutionary Guard, reported Sunday that the company was shut down because of a judicial decree accusing it of running a pyramid scheme.

Oriflame, a publicly held $1.6-billion cosmetics firm that eschews animal testing and claims to use  natural ingredients, has been operating in Iran for several years. Founded in Sweden in 1967, it is now based in Luxembourg and Switzerland and does business in 62 countries around the world.

Bennet said Iranian authorities have yet to provide Oriflame with an explanation for the raid and closure of its office. Swedish media reports say that Sweden’s embassy in Tehran has not yet had access to the arrested Swedish citizen and that the foreign ministry in Stockholm does not know the grounds for his arrest.

"We haven't heard anything from the authorities," Bennet said. "The only thing we can assume at this point is that they are turning against our business ideas. We conduct our business in Iran as we do in the rest of the world."

Western companies have been leaving Iran or scaling back operations in the face of international sanctions restricting trade with the Islamic Republic over its refusal to halt sensitive aspects of its nuclear program.

But Oriflame was in no hurry to leave Iran, which represents a fifth of its Asian sales, according to company statements. "We believe in Iran and the Iranian people," Bennet said. "We intend to come back to this market. We are doing our utmost to resolve the situation."

Iranian authorities may have been unhappy with the way Oriflame allows women to work as a network of independent sales consultants for the company. Iranian authorities allege that the West uses the country’s once-vibrant civil society to foment public discontent against the country’s hard-line Islamist rulers.

Oriflame warned its investors months ago that the business climate had worsened in Iran. Bennet said that the company had found it increasingly tough to do business in Iran in recent months, from not being able to sell products to bad media.

— Alexandra Sandels in Beirut