The Ministry of Finance has excluded the South Korean company Poongsan Corporation from the Government Pension Fund – Global, pursuant to the Ethical Guidelines for the Fund. – According to the Council on Ethics, this company produces cluster munitions, and we cannot participate in the funding of this type of production, says Kristin Halvorsen, the Minister of Finance.

Pursuant to Point 4.4 of the Ethical Guidelines, the Council on Ethics shall issue recommendations on negative screening of companies on the basis of production of weapons that through their normal use may violate fundamental humanitarian principles. It follows from NOU:22 2003 (the Graver Report), and the subsequent deliberation of the Guidelines by the Storting (Parliament), that the production of cluster munitions falls within the scope of Point 4.4 of the Guidelines.

In the summer of last year, the Ministry of Finance excluded eight producers of cluster munitions, based on a recommendation from the Council on Ethics. This recommendation provides a more detailed description of cluster munitions, as well as a description of which components of such munitions fall within the Fund’s Guidelines. The recommendation allowed for the possibility of additional recommendations relating to cluster munitions at a later date: ”It is emphasized that this recommendation does not contain an exhaustive list of possible producers of cluster weapons, and that new recommendations concerning the exclusion of companies on this basis may be given later.”

In a recommendation of 6 September 2006, the Council on Ethics recommends that the South Korean company Poongsan Corporation be excluded from the Fund. The Council is basing its assessment on information from the company’s website, and it is satisfied that the company produces cluster munitions. Against this background, Norges Bank sent a letter to the company, requesting its comments on the findings of the Council on Ethics. The company has failed to respond to this request.

The Ministry of Finance has decided to adopt the Council’s recommendation that Poongsan Corporation should be excluded from the investment universe of the Fund, based on its assessment that the company produces cluster munitions.

On 30 September, the Ministry of Finance instructed Norges Bank to exclude the company from the Government Pension Fund – Global, and stipulated 30 November as the deadline for disposing of its shareholding. The disposal of shares of the company has now been completed. According to Norges Bank, the Fund held shares of Poongsan Corporation valued at about NOK 8 million prior to such disposal. This decision is announced retroactively in order to facilitate the implementation of said disposal.

The recommendation from the Council on Ethics is available on the Ministry of Finance website. Read more about the Council on Ethics for the Fund on: http://www.etikkradet.no