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Norway Oil Fund Bans Firms on Ethical Grounds

Reuters
Friday, 11 Jan 2008 | 7:40 AM ET

Norway has excluded one British, one South Korean and one U.S. company involved in arms production from its $380 billion oil fund on ethical grounds, the Norwegian finance minister announced on Friday.

The fund, which invests Norway's oil and gas wealth for future generations, has excluded Britain's Serco Group, South Korea's Hanwha and U.S. company GenCorp from its investments, Finance Minister Kristin Halvorsen told a news conference.

"According to the Council on Ethics, these companies produce cluster munitions and nuclear weapons, respectively, and we cannot participate in the funding of this type of production," Halvorsen said in a statement.

Hanwha produces cluster munitions, and Serco Group and GenCorp are involved in maintaining or producing nuclear weapons, the ministry said.

"The disposal of shares of the companies has now been completed," the finance ministry said in the statement.

The fund sold 7.5 million shares in Hanwha, a finance ministry official said. He added that it was unclear if the fund -- which has shares in 7,000-7,500 different companies -- had any holdings in GenCorp or Serco Group in 2007, but in any case held no stock in those companies now.

Hanwha shares fell 4.8 percent on Friday in Seoul, and Serco Group shares were down 1.4 percent.

GenCorp's New York-listed stock closed down 0.9 percent on Thursday, but trade on Wall Street had not yet begun.

The ministry of finance has previously excluded seven producers of cluster munitions and nine producers of nuclear arms from the fund, based on the recommendations of the ethics council.

The Norwegian government has led an international effort to ban cluster munitions, which are blamed for maiming and killing thousands of civilians every year.

Norway's Government Pension Fund -- Global, known commonly as the "oil fund," is one of the world's biggest sovereign wealth funds, being worth 2.008 trillion Norwegian crowns ($380.4 billion) at the end of October.

The fund, managed by Norway's central bank, invests most of the Norwegian government's oil and gas income in stocks and bonds overseas.

The ethics council had also looked into the activities of Germany's Rheinmetall AG, but concluded that it did not produce cluster munitions, so it was not excluded from the fund, the ministry said.

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