Jan. 24 (Bloomberg) -- Saudi Arabia and Kuwait today resisted calls from Norway to introduce a sovereign wealth fund code of conduct to counteract political opposition to government investments.

``It's putting the cart before the horse,'' Muhammad al- Jasser, vice-governor of the Saudi Arabian Monetary Agency, said at a panel at the World Economic Forum in Davos, Switzerland. ``It's like the sovereign wealth funds are guilty until proven innocent.''

State-managed funds in countries including Kuwait, Abu Dhabi and Korea have ballooned to $3.2 trillion in assets. Fuelled by record oil prices and rising currency reserves, sovereign fund assets may rise fourfold to $12 trillion by 2015, equal to the capitalization of the Standard & Poor's 500 Index, according to Morgan Stanley estimates. Assets will climb to $28 trillion by 2022, more than double the size of the U.S. economy, the New York-based securities firm predicts.

While Norway's $380 billion state fund publishes its holdings on its Web site, the Kuwait Investment Authority's site cites a 1982 law prohibiting public disclosure of its work. Although Saudi Arabia has no sovereign fund, it plans to start one, al-Jasser said in an interview yesterday.

Ex-U.S. Treasury Secretary Lawrence Summers today told the panel that sovereign funds need to be scrutinized for potential conflicts of interest in their corporate governance, motives and political influence.

Questions Raised

``When multiple motives are possible and with no assurance that value maximization is being pursued'' as the funds' only goal, ``it does raise questions'' he said.

Summers urged the funds to pledge to become long-term investors and never speculate in currencies, or use sovereign wealth funds to pursue national political objectives. He called on them to list five principles by which they will abide.

``All these fears that have been created about sovereign wealth funds these days have no real basis,'' said Bader al- Saad, managing director of the Kuwait Investment Authority, which manages an estimated $250 billion for the Gulf state. ``All our investments have been on a commercial basis. We look to the bottom line and not at anything else.''

Kuwait has been a stable, passive investor in Daimler AG since 1969 and in BP Plc since 1986 without raising any concerns, al-Saad said. While a code of conduct is acceptable in principle, he questioned what it would include. After the session, he told reporters that the Paris-based Organisation of Economic Cooperation and Development should draw up rules governing both funds and recipients.

`Preemptive Regulation'

``We're talking about how to preemptively regulate something that may happen,'' al-Jasser said in response to questions about the potential for misconduct by funds. ``Let's be a little bit more balanced.''

Government funds have invested at least $59 billion in the past year to shore up the balance sheets of such Wall Street companies as Citigroup Inc. and Merrill Lynch & Co. as they sought to replenish equity eroded by subprime mortgage losses.

Finance ministers and central bankers from the Group of Seven industrialized nations in October called for rules to guide international investments of government-run funds, seeking to head off a protectionist reaction to their perceived lack of transparency.

``Sovereign wealth funds need the capital markets to function and the capital markets need their liquidity,'' Lehman Brothers Holdings Inc. Chief Executive Officer Richard Fuld said in the panel debate.

To contact the reporters on this story: Edward Evans in Davos at eevans3@bloomberg.net; Will McSheehy in Davos, Switzerland, at wmcsheehy@bloomberg.net

Last Updated: January 24, 2008 08:57 EST