Norway Wealth Fund Chief Cleared of Ethics Breach

(Bloomberg) -- The chief executive of Norway’s $1 trillion sovereign wealth fund has been absolved of wrongdoing following a probe into his decision to accept a lavish trip from the man who would ultimately succeed him.

Yngve Slyngstad didn’t breach ethical guidelines when he stepped on a luxury flight from Philadelphia to Oslo that was paid for by hedge fund manager Nicolai Tangen, according to Norges Bank, which manages the fund.

But Norges Bank also said Slyngstad probably should have avoided the trip, and said the controversy surrounding the matter means it may need to clarify its ethical guidelines.

The conclusion was delivered on Thursday in response to a list of questions from the fund’s watchdog, which launched a probe earlier this month.

The affair has dominated Norwegian media, after a tabloid exposé revealed the extravagance of the November event in Philadelphia that was arranged and paid for by Tangen. Aside from Slygnstad, Tangen’s guest list included a number of prominent public figures in Norway, all caught hobnobbing in ways most Norwegians could never afford.

The debacle has raised questions as to the appropriateness of Tangen’s recruitment. Left-leaning politicians and union leaders in Norway have voiced anger over the appointment, arguing the financier is ill suited to watch over the savings of an entire nation. His status as a wealthy hedge fund manager has also raised concerns about potential conflicts of interest.

The wealth fund’s watchdog, Norges Bank Supervisory Council, had given Norges Bank until April 29 to answer its questions.

Much of the probe focused on the recruitment process that led the fund to select Tangen. That included a question on why his name wasn’t on an official list of candidates. Norges Bank said it should have made his candidacy known.

In its responses, Norges Bank also said the new CEO has made clear he’s prepared to rearrange his personal wealth in connection with his new role at the helm of the wealth fund, which starts in September.

Tangen intends to keep about 360 million pounds ($446 million) in funds managed by his firm AKO Capital LLP once he becomes CEO of the wealth fund, Dagens Naeringsliv has reported. Tangen’s salary as CEO will be taxed in Norway, and he will also be subject to the country’s wealth tax, since such a levy doesn’t exist in the U.K. meaning there’d be no double taxation, according to a separate email by Norges Bank to the Finance Ministry.

“In his dialogue with the board, Nicolai Tangen made clear that he is ready to reorganize his personal finances in such a way so as to ensure the necessary distance” between his new role and dispositions undertaken by his firm, AKO Capital LLP. That work will be concluded by May 27, it said.

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