Norway’s Government Fund divests Africa Israel Investments, again

Norway’s NOK5.1trn (€597bn) Government Pension Fund will, for a second time, divest from Africa Israel Investments and its affiliate Danya Cebus.

The reason is that the Finance Ministry’s Council on Ethics – the advisory body which faces being absorbed into the fund’s manager Norges Bank Investment Management (NBIM) – has discovered that, contrary to claims, the group is still involved in the construction of Israeli settlements on the occupied West Bank.

It’s the latest recent example of a European pension fund exiting a company linked to the settlements. Earlier this month, Netherlands-based PGGM sparked a diplomatic row by excluding five Israeli banks for their role in financing the settlements. The Norwegian fund had itself caused an earlier diplomatic incident in 2009 when it divested Israeli defence firm Elbit Systems over its role in West Bank surveillance systems.

The government fund originally excluded Africa Israel and Danya Cebus in August 2010 following a Council finding that they were helping to build settlements in the disputed territory.

Three years later, the ministry revoked the exclusion after Africa Israel assured the Council that it had “no construction projects on the Israeli settlements in the West Bank, and at present have no plans for such activities in the future.” Africa Israel is the Tel Aviv-listed holding and investment group controlled by diamond billionaire Lev Leviev.

But just one month later, the Council discovered that Africa Israel had been involved in settlementconstruction in East Jerusalem, which the body considers to be part of the West Bank. Africa Israel confirmed this, adding that it saw nothing wrong with the activity, as East Jerusalem was part of Israel and not the West Bank.

The Council then recommended to the ministry that the companies be excluded from the fund again, and the ministry said in a statement released on Thursday in Oslo that it would abide by the recommendation.

Along with the Israeli firms, the ministry also said the giant investor would exclude Sesa Sterlite, a subsidiary of UK-listed mining firm Vedanta. This is over its operations in India, which the Council believes “present and an unacceptable risk of environmental damage and serious violations of human rights”. Vedanta itself has been excluded from the fund since October 2007. The ministry has also lifted a ban on investing in bonds issued by Myanmar/Burma.

It comes as Norges Bank has responded to a series of recommendations from a panel headed by Professor Elroy Dimson of the London Business School.

Chief among them was that Norges should absorb the Ethics Council. In a letter to the Ministry of Finance, the central bank says: “In our opinion, an integrated approach will increase the chances of realising the overall management objective. The recommendation highlights the challenge of the management mandate currently formulating two different objectives – one overall and one for responsible investment in particular.“