Category: Financial / Investment
The $558 billion fund will no longer invest in chemical and chemicals firm FMC Corporation and fertilizer maker Potash Corporation because it says they buy phosphate from Western Sahara, which it deemed a “particularly serious violation of fundamental ethical norms.”
The Finance Ministry said Potash and FMC purchased phosphate from the Moroccan company Office Cherifien des Phosphates (OCP), which extracts phosphate in Western Sahara, a disputed territory in North Africa that is not self-governed but under Moroccan control.
FMC said it was “disappointed” with the fund’s decision because it has halted the activity after the objection. “FMC no longer purchases phosphate rock from OCP, and has not done so since late 2010,” the company said in an emailed statement.
“We maintain a strict commitment to ethics and corporate governance, and will work with Norway Wealth Fund officials to resolve this issue.”
A Potash Corp spokesman was unable to comment immediately.
In April, it confirmed in a statement on its website that it bought phosphate rock from OCP, adding it was “mindful of the dispute between the Kingdom of Morocco and parties who claim to represent the interests of the inhabitants of Western Sahara”.
In addition to the exclusions, French firm Alstom was put under review for four years due to what the Norwegian finance ministry said was “the risk of gross corruption in the company’s operations”.
Swiss authorities fined Alstom last month for corporate negligence as part of a corruption probe at the French power and engineering group.
“We are extremely surprised. We refer to the decision taken by a Swiss court on Nov. 22,” said an Alstom spokeswoman, referring to the fine which involved corporate negligence but not bribery.
However, PetroChina has been kept on the fund’s investment list after a review, contrary to the recommendation of the fund’s ethics council.
The ministry said the fund had divested its assets in Potash and FMC. At the end of 2010, it held 0.58 percent of Potash shares and 0.9 percent of FMC.
Managed by a unit of the Norwegian central bank, Norway’s wealth fund, commonly known as the “oil fund”, invests abroad the Nordic state’s tax revenue from oil activities to save for future generations.
It is one of the world’s largest funds and is Europe’s biggest equity investor.
Recommendations on exclusions are made by an ethics council that reports back to the Norwegian finance ministry, which has ultimate responsibility for the fund.
Separately, the fund said it has filed proposals with Wells Fargo, Charles Schwab, Western Union, Staples, Pioneer Natural Resources and CME Group to make it easier for shareholders to nominate board members.
“We have looked at a range of issues and selected these companies where we felt boards we entrusted with the stewardship of our investment were not sufficiently accountable,” Anne Kvam, Director of Corporate Governance at the fund told Reuters.
“We looked at traditional corporate governance issues but also took into account their unsatisfactory financial performance.”
She added all six companies have in the past ignored some majority-approved shareholder proposals and the current regulations make it difficult to hold boards accountable.
The U.S. Securities and Exchange Commission had proposed a rule broadly in line with the oil fund’s proposal, but a U.S. court struck it down, saying such rules could be set on a case-by-case basis.
Published: June 12, 2011