January 6, 2009 / 2:54 PM / 12 years ago

Norway oil fund's Israel holdings under scrutiny

OSLO, Jan 6 (Reuters) - Norway’s finance minister has ordered a review of investments by the country’s $300 billion wealth fund in companies active in the Palestinian territories after Israel’s crackdown in the Gaza Strip, officials said.

The Government Pension Fund — Global, known familiarly as the “oil fund,” invests Norway’s oil wealth in foreign stocks and bonds to save for the future when the black gold runs out.

It invests under ethical guidelines from the ministry of finance and so far has excluded a few dozen companies that produce nuclear arms or cluster munitions, degrade the environment or violate human rights or worker rights.

Finance Minister Kristin Halvorsen on Monday asked the fund’s ethics council to assess whether companies in which the fund is invested and which operate in the Palestinian territories are in compliance with the guidelines.

“In light of the increased conflict level in the Palestinian areas, I will ask the Council on Ethics for an account of the council’s work on matters related to companies that have operations in these areas,” Halvorsen said in a statement. The ethical guidelines prohibit the fund from investing in companies where there is an unacceptable risk of contributing to serious or systematic abuses of human rights or serious violations of individuals’ rights in war or conflict.

“Investment in companies that contribute to an occupation against international law or oppression in occupied areas could be affected by both of these considerations,” Halvorsen said.

It was not clear how many companies would be reviewed, officials said. At the end of 2007, the fund owned stocks in 12 Israeli companies and bonds from three Israeli issuers.

The head of the Ethics Council, Gro Nystuen, said that the council had already begun a follow-up review of the fund’s investments in bonds issued by state-owned Israel Electric Corp. (IEC), which supplies power to the Gaza Strip.

In April 2008, the council had said that it could not recommend excluding IEC from the fund despite allegations that the company had restricted power supplies to Gaza last year.

The council found then that a “limited reduction” in IEC’s electricity supply to Gaza did take place but that it had not persisted.

The April letter said, however, that the council could renew its assessment “if future reductions in the electricity supply to Gaza, causing unacceptable humanitarian conditions for the civilian population, are introduced by IEC.”

“We only exclude companies that might contribute to violation of the guidelines in the future,” Nystuen said. “Our system is not meant to punish companies retroactively.”

She declined to say what other companies could be included in the review requested by Halvorsen.

Nystuen said that reviewing the operations of companies held by the fund and active in Israel or the Palestinian territories was part of the day-to-day work of the council.

“We are looking at all companies that might have activities in violation of the ethical guidelines, regardless of whether they are Israeli or operating in Israel,” she said.

Norway’s fund was worth 2.15 trillion Norwegian crowns ($308 billion) at the end of November. It is the world’s second biggest sovereign wealth fund after that of the United Arab Emirates and is Europe’s biggest equity investor. ($1=6.980 Norwegian Crown) (Editing by David Cowell)

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