EU, US seek assurances from sovereign funds

27 February 2008

Mumbai: The European Commission has called upon sovereign wealth funds to adopt a voluntary code of conduct that would make them more transparent and accountable even as treasury officials in the US met executives from two of the world's largest sovereign wealth funds to discuss a set of promises not to use their wealth for political advantage.

The commissioners of the 27-member European Union meeting tomorrow plan to draft a formal proposal for a continent-wide conduct code.

The US delegation met executives from the Abu Dhabi Investment Authority and from the Government Investment Corporation of Singapore last week, The Wall Street Journal reported, quoting officials involved in the talks.

Amidst fears about state-controlled foreign predators gobbling up major European companies, a top official of the EU, however, warned member countries not to pass broad laws to restrict investment from sovereign wealth funds.

The EU's internal market and services commissioner Charlie McCreevy said the 27-member states should exercise the power to block investments only in sensitive, security-related sectors. Restricting the flow of capital for other reasons will lead to legal action by the European Commission, he said in an interview yesterday. .

The code, being negotiated under the auspices of the International Monetary Fund, is aimed at easing Western concerns that the sovereign funds, which control about $3 trillion in assets, might pursue political rather than commercial goals.