Central bank board boss Øystein Olsen has been forced to call in the bank’s main board for a crisis meeting on Monday, after the Parliament raised clear objections Friday over the board’s choice of a new Oil Fund boss. It remains unclear whether billionaire hedge fund manager Nicolai Tangen will actually take over the top job on September 1.
“This is a serious situation,” Finance Minister Jan Tore Sanner declared at a late afternoon press conference on Friday.
Sanner, who noted that the reputation of Norway’s central bank is at stake, is caught in the middle of a major disagreement between the Parliament and the board of Norges Bank, which is responsible for hiring a new chief executive for Norway’s Oil Fund, the country’s huge sovereign wealth fund fueled by offshore oil revenues.
The bank board is supposed to be autonomous of both the government and the Parliament, without politicians meddling in its affairs. After it hired Tangen, though, the Parliament’s own organization charged with monitoring the central bank raised alarms over potential conflicts of interest between Tangen’s personal wealth and the Oil Fund’s assets. Tangen has so far refused to sell off his own large investment fund, AKO Capital, and some of his investments also involve tax havens that are severely frowned upon in Norway.
Three demands from Parliament
The central bank’s board insists it has addressed the potential conflicts of interest, by arranging for AKO to be managed by an external firm over which Tangen would have no control. That hasn’t satisfied either the Parliament’s control group or Parliament itself, with every party in Parliament (including Finance Minister Sanner’s Conservative Party) objecting to the terms of Tangen’s job contract over the course of the past week. The drama climaxed on Friday, when the Parliament’s finance committee unanimously issued three clear demands:
***The leader of the Oil Fund cannot have any ownership or interests that can create, or be seen as creating, any conflicts of interest that would weaken public confidence and the reputation of the Oil Fund.
***The leader of the Oil Fund cannot have any ownership or interests that weaken, or could weaken, the Oil Fund’s work tied to taxes and openness.
***This must be clarified before the new chief of the Oil Fund takes over.
In short, they’re demanding that Tangen sell of his ownership interests in AKO Capital, just as other Oil Fund employees must sell off any holdings that could pose conflicts in their work.
Finance minister ordered to ‘instruct’ bank board
The Parliament’s finance committee then threw the responsibility for carrying out its demands to Sanner . The justice ministry earlier in the day had concluded (after a request for an evaluation of Sanner’s powers from Sanner himself) that the finance minister does have some room to instruct the board of the central bank in a “general” manner. The finance minister is not allowed to instruct the bank board regarding its “concrete choice” of candidates to run the Oil Fund, but can set some requirements.
That led to the meeting between Sanner and central bank chief Olsen late Friday, after which it was clear at a hastily called press conference that thorny issues remain. Not only did Sanner describe the situation as “serious,” he declared that he “expects the board to do what it can so that Norges Bank will (continue to) have a good reputation and the confidence of the public, and I will do everything I can to contribute. We must find solutions.”
“I am most preoccupied with how the bank board will follow up the Parliament’s expectations,” Sanner added.
If Tangen refuses to sell off ownership interests in AKO, which the bank board had not demanded he do, the standoff will continue until either Tangen withdraws or the board withdraws its job offer that he accepted in March. Olsen said Friday evening that Tangen is still “very motivated” to take on the job and would be at the crisis meeting on Monday.
Olsen’s job, meanwhile, may be at stake as well. When asked at the press conference following his meeting with Sanner whether he has considered resigning, however, Olsen issued a clear: “No.”
Sanner stressed that the bank board remains responsible for hiring a new chief executive for the Oil Fund, after current Oil Fund CEO Yngve Syngstad’s two-term period expired.
“They must do what’s necessary to address the concerns and meet the expectations that the Parliament has expressed today,” Sanner said. All involved had the weekend to consider how to do that.