Norway Wealth Fund Drops G4S on Gulf Migrant-Worker Abuses

(Bloomberg) --

Norway’s sovereign wealth fund has dropped U.K. security firm G4S Plc from its portfolio, citing concerns about abuses of migrant-worker rights in Qatar and the United Arab Emirates.

The central bank in Oslo, which manages the $1.1 trillion fund, said it took the step “due to unacceptable risk that the company contributes to or is responsible for serious or systematic human rights violations,” according to a statement on Thursday.

Shares in G4S dropped as much as 3.7% on the news, before paring losses. The fund held a 2.33% stake in G4S at the end of 2018, valued at the time at about $91 million. The fund’s policy is to sell shares in a company before an exclusion announcement is made.

G4S said it had carried out a “robust investigation” into issues raised by Norway’s Council of Ethics, which ended up making the exclusion recommendation, and that the company is making progress on strengthening recruitment and welfare standards in the Middle East.

“We wholeheartedly agree that migrant workers need care and support and deserve to be treated with dignity and respect at all times,” a spokesperson said in an email.

Recruitment Fees

The Council of Ethics said it had assessed the company’s operations in the two Gulf countries, where it employs about 18,000 migrant workers from countries including India, Pakistan and Nepal.

The investigation showed that workers paid recruitment fees to be able to work for G4S, that a substantial part of their salaries went to pay debt related to those fees, and that many were paid less than agreed. In the Emirates, workers saw their passports confiscated, the Council said. The probe also revealed that workers were exposed to long days, no overtime compensation and instances of harassment.

The Council said in its report that G4S had itself acknowledged the risk of human rights abuses and was setting a cap on recruitment fees. But it hasn’t indicated it would end the practice altogether, or taken any measures to prevent misleading information about wages or working conditions, the report said.

Norway’s sovereign-wealth fund, the world’s biggest, is managed according to a set of ethical principles. It’s barred from investing in tobacco and certain kinds of weapons, as well as in companies responsible for serious environmental damage or human rights abuses. The investor currently has 156 companies on its exclusion list.

--With assistance from Siddharth Philip.

To contact the reporter on this story: Mikael Holter in Oslo at mholter2@bloomberg.net

To contact the editor responsible for this story: Tasneem Hanfi Brögger at tbrogger@bloomberg.net

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