Norway’s state-owned pension fund is investing in companies that continue to do highly controversial business in Burma, according to a damning report released today.
The Washington DC and Thailand-based EarthRights International (ERI) says in the report that there is “a high likelihood that the Fund is contributing to grave unethical actions in Burma through its holdings in the Fund”.
The Norwegian pension fund is a sovereign wealth fund founded on the country’s North Sea oil wealth. It is estimated to be worth some $US500 billion and holds the largest number of stocks and shares in Europe, owning approximately one percent of global equity markets.
Its size means that it has channelled approximately $US4.5 billion into companies doing business in Burma, which includes “a cumulative $US450 million invested in companies participating in the controversial Shwe gas and oil transport pipeline project” to China, according to the report.
As of December last year, investments worth $50 million were concentrated in three companies who owned the majority of the Shwe project, off- and onshore: South Korea’s Daewoo International, GAIL of India Ltd., and Korea Gas Corp.
On top of this, the Fund had a $US244 million stake in POSCO, which owns the majority of Daewoo, and approximately $US12 million invested in Hyundai Heavy Industries, which is a construction subcontractor on the project.
Furthermore, around $US90 million is invested in PetroChina and $US58 million invested in Kunlun Energy Co Ltd., the distributors in the project. It also holds a $US168 million stake in Transocean Inc, the Swiss-American drilling company implicated in BP’s Gulf of Mexico disaster, which has also been used for offshore in Burmese waters.
ERI Senior Consultant Matthew Smith, who co-authored the report, says that the investment “puts the Norwegian people in an inconvenient position of complicity in grave human rights abuses in Burma”.
Indeed multiple NGOs, activists and residents are keen to point out that the Shwe project, which is set to net the Burmese junta $US30 billion over the next three decades, is being built with forced labour on land cleared of inhabitants by the military, and with little environmental or social impact assessments.
The Fund has a set of ethical guidelines which, ERI believes, such investments contravene. “The Norwegian peoples’ money is invested in corporate human rights abuses while the Ethical Guidelines go unapplied,” Smith said. “This report presents a distinct opportunity for Norway to do what is intended by its Ethical Guidelines.
“Now is the time for the Council on Ethics to recommend that the Ministry of Finance act on these companies and restore Norway to its position as a global leader in ethical investment,” he added.
Gro Nysteun, the chair of the Council on Ethics, an independent body that looks into investments by the Fund, said that while the findings of the report would be investigated, it would not make the Fund reconsider the stakes it holds in these companies.
“We don’t disagree on the situation in Burma but we can only exclude companies form the pension fund when the companies themselves are actively participating in the violations of norms,” she said.
“If we were to divest from all of the companies that have activities in Burma it would be the same as an economic boycott, and the signal would be that all of those companies cannot operate in Burma at all.”
The Shwe gas pipeline is a huge multinational project that will transport not only much of Burma’s natural gas wealth to China, but a portion of their oil imports from the Middle East and Africa.
As well as the Shwe project, the report is critical of the Fund’s continued investment in the French oil giant, Total, which runs the Yadana gas pipeline carrying natural gas to Thailand. The report says that in 2005 the Fund’s ethical committee surmised that the Yadana pipeline was no longer violating human rights and was therefore not an unethical investment.
ERI claims however that in February it documented two targeted killings close to the Yadana site that were carried out by a Burmese army battalion providing security for Total projects.
“[ERI] continues to document widespread forced labour and other violations by the Burmese Army on behalf of Total and its partners. In five of the last ten years, EarthRights International has documented targeted extrajudicial killings of villagers in the project area by Burmese Army battalions providing security for the Yadana pipeline, and the Yetagun pipeline that runs alongside it.”
It claims the Norwegian pension fund “has $US3.6 billion invested in five companies involved in the Yadana and Yetagun projects”.
Additional reporting by Francis Wade