Norges Bank Investment Management, which runs the world’s biggest sovereign wealth fund, has decided to sell its stake in Chinese telecommunications giant ZTE Corporation and blacklist the company from future investments due to corruption. ZTE is the first company blacklisted by Norges Bank on corruption grounds.
The manager of Norway’s more than $800 bn fund has investigated ZTE and opted not to use its ownership rights to press for change at the world’s fifth-largest maker of mobile phones, but rather sell its $9.4 mn stake, which represents 0.15 percent of the ZTE’s voting rights.
Norges Bank maintains a blacklist of dozens of companies for involvement in tobacco production, violation of individual rights, production of land mines and other reasons. In blacklisting ZTE, it created a new subcategory for ‘gross corruption’ that comes under the heading ‘actions or omissions that constitute an unacceptable risk’.
‘Norges Bank has decided to exclude the company ZTE Corporation from the investment universe of the [Government Pension Fund Global],’ the bank says in a press release. ‘The company is excluded based on an assessment of the risk of severe corruption.’
The investigation into ZTE revealed the company faces corruption allegations in 18 countries, including the Philippines, Myanmar and Nigeria, and is under investigation ‒ or has been under investigation ‒ in at least 10 countries, according to a statement from Norges Bank’s council of ethics. ZTE was banned from public tenders and fined in Algeria for alleged corruption.
‘The company has failed to demonstrate satisfactorily that internal anti-corruption procedures are being effectively implemented in its business,’ says the council of ethics. ‘In conjunction with previous corruption cases and the fact that the company operates in a sector and in many countries associated with a high risk of corruption, this finding indicates that there is an unacceptable risk that the company may once again become involved in gross corruption.’
