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Thursday, June 20, 2024

Oil fund questions oil giant’s ethics

The state-appointed ethics council that oversees investments made by Norway’s huge oil-fueled sovereign wealth fund is questioning whether operations by US oil giant ExxonMobil in Equatorial Guinea violate “fundamental ethical norms.” If so, the fund may need to sell off its ExxonMobil stock.

Norway's oil wealth has made the country affluent, but it's not always apparent in its public infrastructure. PHOTO: Statoil
Norway’s own oil wealth has made the country affluent, but that’s not true in countries like Equatorial Guinea. PHOTO: Statoil

The council is charged with evaluating investments in individual companies in which Norway’s popularly called “oil fund” has stakes. The Norwegian finance ministry, ultimately in charge of the fund that’s tied to Norway’s central bank and long has ranked as one of the biggest investment funds in the world, makes its decisions based on the council’s recommendations.

In general, the oil fund is not allowed to invest in companies that produce weapons that violate “fundamental humanitarian principles,” or in companies that produce tobacco, contribute towards violations of human rights, cause serious environmental damage or are guilty of serious corruption.

Newspaper Aftenposten reported Wednesday that the council has turned its attention to the situation in Equatorial Guinea, where oil revenues have boosted the country’s gross national product to a level higher than in developed nations including Poland and Portugal, but where 77 percent of the population continues to live in poverty. The Norwegian oil fund’s 10th largest single investment is in ExxonMobil stock, and ExxonMobil is the major operator of Equatorial Guinea’s largest oil field.

‘Benefiting only the powerful elite’
ExxonMobil’s operations on Equatorial Guinea’s Zafiro oil field generate major revenues for the country, but the Norwegian ethics council wrote in its annual report that it is concerned that Exxon’s oil operations nonetheless violate ethical norms. That’s because the proceeds of Equatorial Guinea’s “dominant natural resource only seem to benefit the powerful elite,” while the standard of living among the rest of the population “is among the worst in the world.”

The council is concerned that the vast majority of oil revenues generated through Exxon’s operations in Equatorial Guinea land in the hands of the country’s president and dictator Teodoro Obiang and his closest associates. Obiang assumed power through violent means 33 years ago and when oil was discovered in 1990, he opened the closed country to foreign investment, but it’s unknown to those outside Obiang’s sphere how much the oil yields for the state treasury.

International organizations have ranked the country high in terms of corruption and extremely low in terms of freedom of the press or expression. Obiang’s opponents are reportedly imprisoned, tortured and executed. It’s one of the few countries where infant mortality rates continue to rise, noted Aftenposten, and Equatorial Guinea lacks safe drinking water and adequate health care.

Ola Mestad, leader of the Norwegian oil fund’s ethics council, told Aftenposten that the council’s examination of Exxon’s role in Equatorial Guinea is continuing. Because of concerns over stock market sensitivity, Mestad couldn’t go into detail but said council members were “talking about the company (ExxonMobil), gathering information and reporting to the finance ministry.”

‘Not Exxon’s job’ to spread the wealth
Kristin Kragseth of ExxonMobil Norge said the company didn’t want to comment on the ethics council’s work other than to note that it also didn’t want to put pressure on the authorities in Equatorial Guinea to provide more information on its oil revenues. She also said it is the job of those authorities, not ExxonMobil’s, to share the country’s wealth.

“I can confirm that ExxonMobil has activities in Equatorial Guinea,” Kragseth told Aftenposten. She claimed that operating “honestly and ethically” was “among the most important things we do.” She noted that ExxonMobil has been active in the Extractive Industries Transparency Initiative, supported efforts by the World Bank and the International Monetary Fund to encourage more openness and hosted a workshop in Equatorial Guinea for TRACE International (external link) that involved local authorities and aimed “to help” them understand and follow international anti-corruption standards and conventions.

Asked whether ExxonMobil shared the ethics council’s concerns that little of the country’s oil wealth benefited its citizens, Kragseth responded that “it is the job of the authorities to form policies in individual countries and determine how welfare is divided. As a company, it’s not our role to get involved in the policies followed by the country’s government.”

To see Aftenposten’s online version of the story, click here (external link, in Norwegian).

Views and News from Norway/Nina Berglund

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