Norges Bank Investment Management (NBIM), the manager of Norway’s NOK7.3trn (€752bn) sovereign wealth fund, has excluded Chinese telecoms group ZTE from the fund over allegations of corruption spanning nearly two decades.
In a statement, NBIM said the decision to exclude was taken after the Ethical Council’s engagement with ZTE regarding corruption charges bore no fruit. The fund’s holdings in ZTE totalled NOK85m at the end of 2014. The Council advises NBIM on ethical exclusions from the fund, which is formally known as Government Pension Fund Global (GPFG).
In an 18-page summary of its recommendation, the Council noted that Shenzhen-based firm had been involved in corruption allegations in 18 countries since its initial listing in 1997. Formal investigations have been launched in 10 of the group, leading, for example, to the imprisonment of a ZTE representative in Algeria for using bribes to win a contract for the Chinese firm.
The Council added: “Not all of the corruption cases involving ZTE have been concluded. In the spring of 2015, a criminal trial began in Singapore against persons who in police interviews admitted passing large commission payments to the prime minister and other public officials on Papua New Guinea on behalf of ZTE.”Other countries where ZTE representatives have been either accused or found to have used bribes for business include Malaysia, Zambia, Kenya, the Philippines, Myanmar, Nigeria and Liberia. All told, the amount of bribes said to have been used total “many tens of missions of US dollars,” the Council said.
ZTE, which is a signatory to the UN’s Global Compact corporate sustainability platform, has an internal Code of Conduct that forbids the use of bribes in its home country of China or abroad. “The company has training and whistleblowing systems in place, and a compliance team carries out regulator inspections to uncover violations of the Code of Conduct,” said the Council.
Yet the Council also said: “Despite this, the systems appear deficient because it is unclear what risk assessment the company has carried out. It is also unclear what consequences employees face if they breach laws and internal guidelines and how anti-corruption procedures are monitored and improved.”
For its part, ZTE says in its 2014 sustainability report that it offers anti-corruption training, which more than 46,000 employees have completed. Anti-corruption provisions were also added to its internal rules last year.