Oil fund investments under fire
October 5, 2009
Norway’s huge fund that sets aside oil revenues for future generations has become the target of fresh criticism for failing to follow its own ethical guidelines. Investments in a Canadian gold mining company involved in controversial projects in Central America and fertilizer companies doing business in the occupied Western Sahara have set off calls for immediate sell-offs.
Newspaper Aftenposten reports that the so-called “oil fund,” managed by an arm of Norway’s central bank, has a stake worth NOK 815 million in Goldcorp of Canada. Goldcorp has sparked the anger of the local population in San Marcos province in northeastern Guatemala, because they believe its mining operations are damaging the land and the health of children. Many have developed skin rashes believed tied to chemicals used in the mining process.
Atle Sommerfeldt of Norwegian Church Aid (Kirkens Nødhjelp) told Aftenposten there are two main problems with Goldcorp’s mining. “One is that the local population is being systematically ignored, which we believe is a violation of their human rights,” Sommerfeldt said. “The other is the pollution of their local environment. In all probability, there is a connection between local health problems and emissions from the mining.”Gro Nystuen of the ethics council charged with overseeing the oil fund’s investments told Aftenposten that Goldcorp “is a company that’s absolutely on our radar.” She said the mining industry is one the council follows especially closely, and it’s aware of the criticism building around Goldcorp, which is earning large profits in Guatemala and on another controversial mining operation in Honduras.
While some organizations in Norway are demanding that the oil fund sell off its stake in Goldcorp, Nystuen said it’s best to rather use the fund’s “active ownership” role. “If we pull out, we lose all influence,” she said.
Newspaper Dagens Næringsliv reported late last week that oil fund managers have been exercising some of their clout, demanding that companies in which the fund has invested appoint independent chairmen who aren’t part of management. The oil fund doesn’t like board structures in the US, for example, where the chairman is also chief executive officer. The fund thinks CEOs should be answerable to the board and its chairman, not one and the same person.
Other problems in Western Sahara
Calls are also being made, meanwhile, for the fund to pull out of seven companies extracting phosphate from occupied areas of Western Sahara. The phosphate is considered a valuable natural resource for the impoverished local population, but the area is occupied by Morocco and revenues from the phosphate operations are going to Moroccan coffers, not local ones. Norwegian authorities have warned against investments in the disputed area, making it ironic that the state’s own oil fund has invested itself.
Nystuen wouldn’t comment on the investments, nor would Norway’s Foreign Ministry. Elisabeth Rasmussen of a refugee rights group, which is following the fate of poor local residents, called the oil fund’s stake “bad for Norway as a peace nation. We shouldn’t allow ourselves to earn money on something like this.”
Jan Egeland, a former diplomat and UN envoy who now runs a foreign policy institute in Oslo, called the oil fund’s investment in Western Sahara “completely wrong.” He said the ethics council needs more staffing so it can better do its job.