Swedish furniture giant IKEA says it "deeply regrets" the use of forced prison labour by some suppliers in communist East Germany.
The company has released an independent report showing the prisoners were involved in the manufacture of goods 25 to 30 years ago.
IKEA commissioned auditors Ernst & Young to look into allegations aired by a Swedish television documentary in June.
They were first raised by a human rights group in 1982.
The company says that since May approximately 20,000 pages of documents from the internal archives of the IKEA Group and 80,000 archived objects at German federal and state archives have been analysed and around 90 individuals have been interviewed.
IKEA representatives were aware
The report indicates that "political and criminal prisoners were involved in parts of the component or furniture production units that supplied to IKEA 25-30 years ago".
The investigation also shows that there were IKEA representatives who at the time were aware of the possible use of political prisoners.
The group admits that even though it took steps to secure that prisoners were not used in production "it is now clear that these measures were not effective enough".
Use of political prisoners "never acceptable"
Jeanette Skjelmose is Sustainability Manager for IKEA of Sweden.
"“We deeply regret that this could happen. The use of political prisoners in production has never been acceptable to the IKEA Group" she said.
"At the time, we didn"t have today’s well-developed control system and obviously didn"t do enough to prevent such production conditions among our former GDR (East German) suppliers" she added.
The report concludes to say that all IKEA products must be produced under acceptable conditions.
The retail giant has two Irish stores in Dublin and Belfast.