Article | Last updated: 2007-02-07 | Ministry of Finance
The Petroleum Fund Advisory Commission on International LawMemorandum to the Ministry of Finance
Question of exclusion of Chartered Semiconductors Manufacturing Ltd
Approaches and conclusion
Reference is made to a letter from the Ministry of Finance dated 1 July 2002, where the Ministry of Finance requests the Petroleum Fund Advisory Commission on International Law (Advisory Commission) to “consider whether it is a violation of Norway’s obligations in accordance with the Land Mine Convention to invest in companies which have the same principal owners as Singapore Technologies Engineering, even though these do not produce anti-personnel landmines.”
The Advisory Commission concludes that there is hardly basis for alleging that investments in all companies that have the same principal owners as Singapore Technologies Engineering (STE) will be in violation of the Mine Ban Convention. The Advisory Commission presumes that investments in the mentioned company, Chartered Semiconductors Manufacturing Ltd (CSM), do not constitute violation of the Mine Ban Convention.
Facts of the case
According to information from Norges Bank (the Central Bank of Norway), the mentioned company, Chartered Semiconductors Manufacturing Ltd, is owned by the two companies Singapore Technologies Pte Ltd and Singapore Semiconductors, with 39 and 31% respectively. The company’s remaining shares are privately held. The two above-mentioned companies are wholly owned by the holding company Temasek Holdings Ltd, which is again wholly owned by the state of Singapore.
Singapore Technologies Pte Ltd, and through that Temasek Holdings Ltd and the state of Singapore, own 56% of the shares in Singapore Technologies Engineering (STE), and 70% of the shares in Chartered Semiconductors Manufacturing Ltd. It is therefore correct that the two companies Chartered Semiconductors Manufacturing Ltd (CSM) and Singapore Technologies Engineering (STE) have the same principal owner.
In the following, it is presumed that Singapore Technologies Engineering (STE) produces anti-personnel mines through its wholly owned subsidiary Singapore Technologies Kinetics (STK). We have no information about and are not familiar with any allegations that Chartered Semiconductors Manufacturing Ltd produces anti-personnel mines or components or technology for such production.
Article 1 of the Mine Ban Convention 1The Convention on the Prohibition of the Use, Stockpiling, Production and Transfer of Anti-Personnel Mines and Their Destruction, 1997 has the following wording:
- Each State Party undertakes never under any circumstances:
- To use anti-personnel mines;
- To develop, produce, otherwise acquire, stockpile, retain or transfer to anyone, directly or indirectly, anti-personnel mines;
- To assist, encourage or induce, in any way, anyone to engage in any activity prohibited to a State Party under this Convention.
- Each State Party undertakes to destroy or ensure the destruction of all anti-personnel mines in accordance with the provisions of this Convention.
The Advisory Commission on International Law has no reason to presume that the activities of the company Chartered Semiconductors Manufacturing Ltd are covered by any of the alternatives in letter (b) of the provisions. The question is whether possible investments of Norwegian state-owned funds in the company still can constitute a violation of Article 1 (1) (c).
According to letter (c) the states parties oblige themselves to “never under any circumstances, to assist, encourage or induce, in any way, anyone to engage in any activity prohibited to a State Party under this Convention”. This provision, according to the wording, goes far in prohibiting any kind of possible assistance in, inter alia, production of anti-personnel mines.
According to Article 1 (1) (c) in connection with letter (b), assistance to both direct and indirect development and production of anti-personnel mines is covered by prohibition.
The question is whether investments in the company Chartered Semiconductors Manufacturing Ltd (CSM) can be perceived as assistance within the meaning of the Convention. To allege this, such investments must consist of an economic or other form of contribution to the companies Singapore Technologies Engineering (STE)/Singapore Technologies Kinetics (STK). This can hardly be said to be the case. Even though both companies have the same principal owner, namely the state of Singapore in the last instance, investments in one of the companies is not likely to have any effect in the other.
The business law point of departure is that each legal subject is responsible for itself. When the Petroleum Fund’s Advisory Commission on International Law, in its memorandum to the Ministry of Finance, dated 22 March 2002, regarding the companies Singapore Technologies Engineering (STE) and Singapore Technologies Kinetics (STK), took as the point of departure that an identification between those two companies should be made, it was because the mine-producing company (STK) was an 100% wholly-owned subsidiary of STE, that STK presented itself through the parent company’s brochure material and internet pages, and that Norges Bank’s letter to STE was answered directly from STK. 2See Advisory Commission on International Law’s memorandum of 22 March 2002, citing as an enclosure to White Paper to Parliament .no.2 (2001-2002) Revised national budget 2002 It is therefore unproblematic to assume that Singapore Technologies Engineering through its subsidiary, directly or indirectly, participated in the production of anti-personnel mines.
As concerns the relationship between STE and CSM, it is not comparable to the above-mentioned relationship. Apart from the fact that they have the same principal owners, there is no obvious connection between the two companies. Investment in shares in one of the companies will neither directly nor indirectly be significant for the other company. Even though the state of Singapore has part-ownership in one company which produces anti-personnel mines, this does not follow that all other companies that Singapore has part-ownership in are regarded as participating to this production.
The Advisory Commission wants, for the sake of order, to specify that when the conclusion in the previous memorandum 3See footnote 1 was that “even modest investments in the company Singapore Technologies can imply a violation of the accessory prohibition...”, it appeared from the context that it was Singapore Technologies Engineering that was meant. There were no intentions of saying anything about the other companies under Temasek Holdings Ltd.
On this background, it is the opinion of the Petroleum Fund Advisory Commission on International Law that there is no reason to presume that the Mine Ban Convention’s prohibition against assistance would cover investments by the Petroleum Fund in the company Chartered Semiconductors Manufacturing Ltd.