The Oil Fund: Ethics and morals vs. financial security / News / The Foreigner

The Oil Fund: Ethics and morals vs. financial security. How easy is it to ensure “a clean nose” when dealing with large sums of money for the good of a country, and can any measures be taken should things go awry? The Norwegian Oil Fund – also known as the State Petroleum’s Fund – was established in 1990 as a result of a debate on what to do with the Norway’s oil income, and how it should be managed. The state started investing in foreign shares in 1998 with the purpose of providing capital for state pensions, and securing future generations financially. The fund is currently worth 2,624 billion kroner, and rising. After its amalgamation with the Benefits Fund in 2006, the Oil Fund became known as the Norwegian Government Pension Fund - Global.

oil, fund, government, pension, fund, norwegian, novartis, india, medecins, sans, frontieres, msf, ethics, morals, mark, curtis, norway, central, bank, finance, department



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The Oil Fund: Ethics and morals vs. financial security

Published on Friday, 2nd October, 2009 at 09:09 under the news category, by Michael Sandelson   .
Last Updated on 6th October 2009 at 10:06.

How easy is it to ensure “a clean nose” when dealing with large sums of money for the good of a country, and can any measures be taken should things go awry?

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3d render stock market graph
Photo: Sai Yeung Chan/Shutterstock Images


A fly in the oil?

The Norwegian Oil Fund – also known as the State Petroleum’s Fund – was established in 1990 as a result of a debate on what to do with the Norway’s oil income, and how it should be managed.

The state started investing in foreign shares in 1998 with the purpose of providing capital for state pensions, and securing future generations financially. The fund is currently worth 2,624 billion kroner, and rising. After its amalgamation with the Benefits Fund in 2006, the Oil Fund became known as the Norwegian Government Pension Fund - Global.

In a commentary previously published on The Foreigner, the British historian and journalist Mark Curtis doesn’t believe that the fund’s investment portfolio is above suspicion.

“Regarded by many as a model of ethical investment, its portfolio is more like a dirty list of the world’s worst corporations, including numerous oil, mining and agribusiness corporations criticized for their human rights and environmental impacts. The fund also invests in half a dozen tax havens and numerous Israeli and other companies accused of contributing to the occupation of Palestinian territories. The government has so far excluded only a handful of companies from the fund on ethical grounds.”

The bitter pill

Norway is also under fire from the Norwegian arm of Médecins Sans Frontières (MSF), albeit in relation to just one specific case.

The Swiss pharmaceutical company Novartis AG is currently engaged in litigation, challenging the Madras High Court’s ruling to uphold India’s Patent Act. Norway is a shareholder in the company.

Using Curtis’ opinion as their starting point – although Siv Mjaaland, the organisation’s head of information tells The Foreigner that they have no opinion of what Curtis writes, nor do they wish to link the two – MSF criticise the government for their “double standards and impotence” in a recent commentary in Dagsavisen.

“Strangely enough, the Norwegian government is cheering for victory in both corners...On the surface the Norwegian government appears to be keeping a steady course...Meanwhile, our oil money is propagating in the very same company that we are criticising... Through its passive interest in Novartis, the Norwegian government is making money by counteracting its own policies.”

Ethical guidelines

Neither Curtis nor MSF suggest the Ministry of Finance and the Norwegian Central Bank are unaware of the fund’s responsibilities. It does have its own ethical guidelines to follow, however.

The Government Pension Fund – Global should not make investments which constitute an unacceptable risk that the Fund may contribute to unethical acts or omissions, such as violations of fundamental humanitarian principles, serious violations of human rights, gross corruption or severe environmental damages.”

The fund’s ethical basis comprises:

·    exercise of ownership rights

·    negative screening of companies controlling or producing weapons that contravene fundamental humanitarian principles and

·    exclusion of companies that violate human rights, damage the environment, are corrupt, inflict severe
environmental damages, or are unethical.

(The above has been translated from Norwegian by the Ministry for information purposes only, and is not legally binding, according to their website).

In two separate emails neither the Department of Finance nor the Norwegian Central Bank wished to comment about Curtis’ and MSF’s opinions as a matter of policy.

And as to whether or not the criticism that is directed against the fund remains valid, only time will tell.




Published on Friday, 2nd October, 2009 at 09:09 under the news category, by Michael Sandelson   .
Last updated on 6th October 2009 at 10:06.

This post has the following tags: oil, fund, government, pension, fund, norwegian, novartis, india, medecins, sans, frontieres, msf, ethics, morals, mark, curtis, norway, central, bank, finance, department.





  
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