Zeno Swijtink
09-16-2008, 10:51 PM
Fifth of wealth funds ‘unaccountable’ (https://www.ft.com/cms/s/0/08f09ca8-8283-11dd-a019-000077b07658.html)
By Demetri Sevastopulo and Krishna Guha in Washington
Published: September 14 2008 22:59 | Last updated: September 14 2008 22:59
One fifth of sovereign wealth funds are not accountable to their domestic legislatures, according to a new survey supported by the International Monetary Fund.
The survey of 20 such funds found that 21 per cent were not accountable, while 58 per cent reported to their legislatures through a board chair or minister of finance.
The survey was conducted under the auspices of the IMF by the international working group of sovereign wealth funds (IWG) as part of a process towards drafting a set of principles for them. Following a summit in Santiago, Chile, this month, the IWG reached agreement on a draft set of 24 principles expected to be unveiled next month.
The push for a voluntary code of conduct comes amid increased scrutiny of the role of such funds in the global financial markets. US politicians have grown more vocal about their nature, as several have increased their stakes in US companies.
The survey found that 65 per cent of the entities are funded by mineral royalties, mainly oil. They generally do not engage in macro-economic policies, except in cases where monies are transferred to their budget in special cases, or to the central bank for balance of payments or monetary needs.
The survey found all respondents compiled financial statements, and some complied with the international financial reporting standards.
However, “others indicate that they apply accounting standards which they consider ‘equivalent to’ or ‘materially’ the same as the IFRS”, the report found.
The “Santiago principles” cover legal frameworks, transparency and accountability, governance, operational independence and clarity of mandate.
A core principle will stipulate that funds make their investment decisions on commercial, not political, grounds.
While the US government welcomed the principles, it also recognised there was no way to ensure political motives were not involved.
Copyright The Financial Times Limited 2008
By Demetri Sevastopulo and Krishna Guha in Washington
Published: September 14 2008 22:59 | Last updated: September 14 2008 22:59
One fifth of sovereign wealth funds are not accountable to their domestic legislatures, according to a new survey supported by the International Monetary Fund.
The survey of 20 such funds found that 21 per cent were not accountable, while 58 per cent reported to their legislatures through a board chair or minister of finance.
The survey was conducted under the auspices of the IMF by the international working group of sovereign wealth funds (IWG) as part of a process towards drafting a set of principles for them. Following a summit in Santiago, Chile, this month, the IWG reached agreement on a draft set of 24 principles expected to be unveiled next month.
The push for a voluntary code of conduct comes amid increased scrutiny of the role of such funds in the global financial markets. US politicians have grown more vocal about their nature, as several have increased their stakes in US companies.
The survey found that 65 per cent of the entities are funded by mineral royalties, mainly oil. They generally do not engage in macro-economic policies, except in cases where monies are transferred to their budget in special cases, or to the central bank for balance of payments or monetary needs.
The survey found all respondents compiled financial statements, and some complied with the international financial reporting standards.
However, “others indicate that they apply accounting standards which they consider ‘equivalent to’ or ‘materially’ the same as the IFRS”, the report found.
The “Santiago principles” cover legal frameworks, transparency and accountability, governance, operational independence and clarity of mandate.
A core principle will stipulate that funds make their investment decisions on commercial, not political, grounds.
While the US government welcomed the principles, it also recognised there was no way to ensure political motives were not involved.
Copyright The Financial Times Limited 2008