Letter | Date: 2006-09-01 | Ministry of Finance
(Unofficial English translation)
To the Ministry of Finance
Oslo, May 24, 2006
Recommendation on suspension of exclusion of KerrMcGee Corporation (“KerrMcGee”).
The Council on Ethics for the Government Petroleum Fund, now the Government Pension Fund – Global, (“the Council”), submitted a recommendation to the Ministry of Finance on May 12, 2005, on the exclusion of KerrMcGee from the Fund’s investment universe.
The company was, through its subsidiary KerrMcGee de Maroc Ltd, involved in exploration and survey activities for mapping of oil and gas resources on the continental shelf off Western Sahara. For reasons detailed in the recommendation on exclusion, the Council considered these activities to be in breach of the Fund’s ethical guidelines’ point 4.4, “ other particularly serious violations of fundamental ethical norms”. 1The recommendation to esclude KerrMcGee is dated April 12, 2005: http://odin.dep.no/etikkradet/english/documents/099001-230017/dok-bn.html
The Ministry of Finance decided to follow the Council’s recommendation and instructed Norges Bank on April 29, 2005 to exclude KerrMcGee from the Fund’s investment universe. The Fund’s holdings in the company were sold and the Ministry of Finance published its decision on June 6, 2005. 2Press release from the Ministry of Finance, June 6, 2005: http://odin.dep.no/fin/english/topics/pension_fund/p10002777/pressreleases/006071-070639/dok-bn.html
On May 3, 2006, the Council wrote to KerrMcGee to enquire whether the company’s activities on the continental shelf off Western Sahara were terminated.
In a letter dated May 10, 2006, KerrMcGee confirmed that the company had ceased its activities in the Boujdour field and that the licence to conduct explorations had expired in April 2006.
2 The Council’s assessment
Point 4.6 of the Fund’s ethical guidelines states the following:
“ The Council shall review on a regular basis whether the reasons for exclusion still apply and may against the background of new information recommend that the Ministry of Finance revoke a decision to exclude a company.”
Based on the new information that the Council has received, the activities that formed the basis for the Council’s recommendation to exclude the company have now ended. The Council therefore finds that the basis for exclusion of KerrMcGee from the investment universe of the Government Pension Fund – Global no longer exists.
3 The Council’s recommendation
The Council on Ethics recommends that the Ministry of Finance revoke its decision to exclude the company KerrMcGee from the investment universe of the Government Pension Fund – Global. This recommendation is founded on point 4.6 of the Fund’s ethical guidelines, which warrants recommendation to revoke a decision of exclusion when the reason for the exclusion no longer applies.
This recommendation is submitted on May 24, 2006, by the Council on Ethics for the Government Pension fund – Global.
Gro Nystuen Andreas Føllesdal Anne Lill Gade Ola Mestad Bjørn Østbø
(Chair) ( sign.) (sign.) (sign.) (sign.)