* Fund bound by guidelines on ethical investments
* PetroChina, Leonardo put under observation
* Fund to engage Eni, Saipem in "active ownership"
(Adds details from statement)
By Gwladys Fouche and Nerijus Adomaitis
OSLO, May 5 Norway's wealth fund is examining
Chinese energy firm PetroChina and Italian defence
firm Leonardo to see if there is a risk of corruption
in future, the central bank said, after former executives at
both firms were linked to graft.
Norway's central bank, which has a unit to manage the $935
billion fund, also said in a statement on Friday it would "raise
the issue of the risk of severe corruption" with Italian oil and
gas group Eni and oil services firm Saipem.
Ethical guidelines drawn up by the Norwegian parliament bar
the world's largest sovereign wealth fund from investing in
firms that are involved in activities such as producing nuclear
weapons or tobacco products, or deemed at risk of corruption.
The fund's Council on Ethics makes recommendations to the
central bank's executive board, which decides whether to act.
"The executive board has decided to place the companies
PetroChina Co Ltd and Leonardo SpA under observation based on an
unacceptable risk that the companies contribute to, or are
responsible for, severe corruption," the central bank said.
It said the Council on Ethics had recommended both firms be
excluded from the fund's investments but also said both
companies "have taken measures against corruption."
"The executive board believes that these measures provide
sufficient grounds to observe the development in the future," it
At the end of 2016, the fund had a 0.13 percent stake worth
$182 million in PetroChina, whose chief executive between 2000
and 2013, Jiang Jiemin, was sentenced in 2015 to 16 years in
prison for bribery and abuse of power. Jiang admitted guilt.
The Norwegian fund had a 1.53 percent stake worth $124
million in Leonardo, whose former CEO Giuseppe Orsi was jailed
by an Italian court for four-and-a-half years last year for
corruption and falsifying invoices. Italy's highest court
ordered a retrial in December. Orsi denies the charges.
Leonardo told the Council on Ethics that graft allegations
were levelled at the previous management team not the company.
PetroChina and Leonardo did not immediately respond to a
Reuters requests for comment on Friday's central bank statement.
The central bank statement also said the executive board had
"decided to raise the issue of the risk of severe corruption"
with Eni and Saipem, which is controlled by Eni and Italian
state lender Cassa Depositi e Prestiti.
The bank described its engagement with both firms as "active
ownership", saying this approach was "better suited" to dealing
with the issues and reducing risk.
The fund is Eni's third-largest investor with a stake of
1.72 percent and Saipem's fourth-largest investor with a stake
of 1.68 percent, according to Thomson Reuters data.
The Council on Ethics said executives and Eni itself were
being investigated over allegations of corruption in Nigeria in
2011. Eni has denied that the company or its personnel were
involved in any wrongdoing.
Eni declined to comment when contacted by Reuters on Friday.
The Council on Ethics said the Italian prosecutors had
accused Saipem of links to corruption, including in Algeria
where it was alleged to have paid intermediaries to secure
contracts. Saipem has said it could prove the allegations were
groundless in court.
Saipem was not immediately available for comment on Friday.
(Additional reporting by Stephen Jewkes in Milan; Editing by