Norway Pushed to Review Oversight of World’s Biggest Wealth FundSaleha Mohsin
Norway’s $880 billion sovereign wealth fund is facing new calls for tighter oversight as the government prepares its annual strategy document.
Labor, Norway’s largest political party, wants to use the process to reassess the supervision framework as the fund’s rapid growth and expanding investment universe may require “more comprehensive management,” said Torstein Tvedt Solberg, who sits on parliament’s Finance Committee.
Tvedt Solberg said the fund’s ambitions to become a more active investor and expand into new assets add pressure to the oversight structure. “There’s a need to do a thorough review of this system,” he said.
Control of the wealth fund is split across various units in the government and the central bank. The Finance Ministry provides the investment mandate for the fund, which is then managed by the central bank. The bank’s seven-member board, which is appointed by the government and includes the governor, has oversight, while a 15-member supervisory council, elected by parliament, oversees the central bank.
While Finance Minister Siv Jensen on Tuesday declined to confirm whether an evaluation of the oversight would be part of the government’s next set of proposals, she said the matter “will be debated when we launch the white paper in April.”
Tvedt Solberg, whose Labor Party is the main group in Norway’s opposition bloc, said he sees this as a signal that the government will take the necessary next step.
Jensen “was quite clear that she understood the challenges we noted,” he said. “Now there will be an expectation to see something about this in the white paper.”
Knut Arild Hareide, leader of the Christian Democrats, a government support party, said he’s open to a review on how the fund is monitored.
“A discussion on how the fund is supervised is important as it grows and as there are considerations to expand” the fund’s mandate, Hareide said in an interview Tuesday. “There needs to be a solid framework at the fund.”
A review would come as the government moves closer to deciding whether the fund, which owns 1.3 percent of global stocks, will be freed to broaden its investments to include infrastructure. The fund has also sought to expand into private equity.
It’s mandated by the government to hold about 60 percent in stocks, 35 percent in debt and 5 percent in properties. The investor, which gets its capital from Norway’s oil and gas wealth, has been lobbying to be allowed to move into new assets such as private equity to boost returns.
The investor was embroiled in a controversy a year ago when local media reports questioned whether the state-run fund followed its mandate when it invested in Formula One ahead of a planned initial public offering. The fund can only buy private equity if a company is planning to sell shares to go public. Formula One’s IPO was subsequently canceled.
“The complexity of this type of investment illustrates the challenges of expanding the investment universe of the fund,” Tvedt Solberg said.