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Worries over Norway’s new wealth fund chief play out in…

OSLO, Aug 10 – Norway’s central bank faced fresh criticism on Monday over its decision to appoint a wealthy businessman to lead the country’s $1.1 trillion sovereign fund, but it continued to defend its choice at a hearing in the country’s parliament.

Norges Bank in March announced that hedge fund veteran Nicolai Tangen would take over the running of Norway’s rainy-day assets from September, while putting his own 43% stake in London-based AKO Capital into a blind trust.

“There’s been a breach of guidelines, regulations and laws,” said Julie Brodtkorb, who heads the Norges Bank supervisory board, a watchdog appointed by parliament, as she described the hiring process.

“While we agree that measures have been taken to reduce the potential for conflicts of interest, such risks have not been eliminated,” she said in testimony before parliament’s finance committee.

Norges Bank has previously admitted to being too slow in releasing Tangen’s name as part of a public list of applicants for the job to head Norges Bank Investment Management (NBIM), which is mandated by law.

Defending the appointment however, central bank Governor Oeystein Olsen said Tangen is now only a passive investor in AKO and that any potential conflicts of interest had been “eliminated for all practical puprposes”.

“In a thorough process to recruit a new CEO of NBIM, Nicolai Tangen emerged as the decidedly strongest candidate,” Olsen told the hearing.

“Nothing has come to light in recent months that has changed our assessment,” he said.

The sovereign wealth fund, the world’s largest, owns about 1.5% of all listed global equities and is worth three times Norway’s annual gross domestic product, making its investments returns vital to the country’s public finances.

Tangen’s surprise appointment thrust the 54-year-old, whose private wealth is estimated at more than $500 million, into the limelight in Norway.

Overturning his appointment would probably require the government to replace Olsen and others on the central bank’s executive board, which was unanimous in choosing Tangen. (Reporting by Terje Solsvik and Nora Buli, editing by Larry King)

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