SWF Code of Conduct: Where’s the Teeth?
Major sovereign wealth funds apparently have agreed to a code of conduct covering transparency and investment principles. The working group of funds sponsored by the International Monetary Fund announced Tuesday with some fanfare that agreement had been reached, but provided no details. How’s that for a first step on the road to transparency?
Here’s the core of the statement:
The Generally Accepted Principles and Practices for Sovereign Wealth Funds (GAPP) is a voluntary framework that would guide the appropriate governance and accountability arrangements, as well as the conduct of appropriate investment practices by SWFs. In response to the call from the International Monetary Fund’s policy-guiding International Monetary and Financial Committee (IMFC), the IWG expects to present the GAPP to the IMFC at its October 11 meeting in Washington DC. The IWG intends to publish the GAPP thereafter.
The IWG members also decided to explore the establishment of a standing group of sovereign wealth funds (SWFs). This is in recognition of the need to carry forward the work relating to the GAPP, as necessary, and to facilitate dialogue with official institutions and recipient countries on developments that impact SWF operations.
Apart from adding to confusion by choosing a name almost identical to GAAP, the apparently moribund Generally Accepted Accounting Principles, the announcement offers little to suggest that the measures will have any bite.
The Wall Street Journal reports that the funds insisted that the codes are viewed as voluntary, and that the IMF will neither monitor not police the way the funds apply the principles. Still, given the wide range of investment and disclosure philosophies of the funds it is unreasonable to expect any stringent self-policing.
The latest example of the state of play is today’s announcement on the of the Abu Dhabi United Group’s purchase of Manchester City Football Club:
“Abu Dhabi United Group for Development and Investment (ADUG) has bought the English football club Manchester City, Dr Sulaiman Al Fahim, chief executive officer of Abu Dhabi-based real estate developer Hydra Properties, told Gulf News on Monday.”
“The amount paid for the acquisition of the club cannot be disclosed. The acquisition will help the Abu Dhabi brand name and allow talented UAE players to play in the premier league and get access to all the world class opportunities that exist,” said Al Fahim by telephone.
Of course it can be disclosed, it just wasn’t, which is after all the buyer’s prerogative as things stand.
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