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Norway Wealth Fund’s Watchdog Says New CEO Deal Still Faulty

Norwegian Wealth Fund’s Watchdog Says New CEO Deal Still Faulty

The watchdog overseeing Norway’s central bank renewed its criticism of how a new chief executive was appointed for the country’s $1.1 trillion sovereign wealth fund.

The head of Norges Bank’s Supervisory Council told key lawmakers gathered for a rare parliamentary hearing that risks remain for conflicts of interest and that rules were broken when hedge-fund manager Nicolai Tangen was hired to head the fund.

Although the accusations leveled at the central bank are serious, it was unclear whether they will have any consequences for the hiring of Tangen, who is set to start on Sept. 1.

Norway Wealth Fund’s Watchdog Says New CEO Deal Still Faulty

The watchdog “doesn’t share the view” of Norges Bank that possible conflicts of interest between the wealth fund, Tangen’s firm AKO Capital LLP and his personal assets have “for all practical purposes been eliminated,” Julie Brodtkorb, the head of the Supervisory Council, said in the webcast hearing on Monday.

The central bank, which manages the fund, has broken both ethical principles and transparency laws in the appointment process, and may also have breached the central-bank act by not informing the Finance Ministry that Tangen would be allowed to keep a big stake in his company, she added.

Controversial Appointment

Tangen’s appointment came under fire almost from its announcement in March. The watchdog, some lawmakers and other observers have criticized different parts of the hiring process, with most of the debate focusing on how Tangen would create Chinese walls between his wealth, estimated at about 700 million pounds ($900 million), AKO (where he will remain the biggest owner) and his new job.

Norges Bank governor Oystein Olsen repeated in comments to the parliament’s Finance Committee on Monday that the risk of conflicts had been all but eliminated, although he conceded there had been “learning points along the way.”

The committee may now decide to ask the Finance Ministry to take some form of action, though the threshold for challenging the central bank’s prerogative to hire the wealth fund CEO appears to be high. The Conservative-led minority government has so far been careful not to get drawn into the debate, and its ally in parliament, Progress, has said it’s satisfied with the terms of Tangen’s contract.

Members of the Conservative Party and opposition Labor Party, the biggest groups in parliament, after the hearing declined to say whether they believed Tangen would be able to start on Sept. 1, according to Norwegian news agency NTB. The smaller opposition Socialist Left Party said it didn’t have confidence in Tangen.

The Supervisory Council, whose members are appointed by parliament, doesn’t have the power to overrule the central bank’s decisions.

©2020 Bloomberg L.P.