Government Pension Fund Global: Company placed on observation list

The Ministry of Finance has decided to put Alstom S.A. on its observation list due to the risk of gross corruption in the company’s operations. The Council on Ethics shall observe the company over a four year period.

- To contribute to good corporate governance and well-functioning markets is an overall goal of the work with responsible investments in the GPFG. Corruption prevention goes to the heart of good corporate governance. We will have a low tolerance for corruption instigated after the company was put on the observation list, says Minister of Finance Sigbjørn Johnsen.

In its letter to the Ministry of Finance of 1 December 2010, the Council on Ethics recommended the exclusion of the French company Alstom S.A. from the fund’s investment universe. The recommendation is based on the conclusion that there is an unacceptable risk of gross corruption in the company’s operations.

On-going legal processes and corruption prevention
According to the ethical guidelines, before it reaches an exclusion conclusion, the Ministry should always assess whether other measures may be more suitable for reducing the risk of continued norm violations or may be more appropriate for other reasons. The Ministry has therefore assessed whether available measures other than exclusion would be better suited to reduce the future risk of corruption in Alstom’s operations. 

Companies may be put on an observation list if there is doubt about whether the conditions for exclusion are met or about future developments, or if it is deemed appropriate for other reasons.

Following an overall assessment of the circumstances of the case, including the risk of the company’s involvement in gross corruption in future, the Ministry of Finance has decided that Alstom S.A. should be placed on the observation list. Among other things, the Ministry has attached weight to the fact that Alstom is currently the target of legal proceedings in many different countries, and that the outcomes of these proceedings are not yet clear. Future developments will also depend on the company’s systems for handling corruption prevention.
 
Four year observation period
The Ministry of Finance has asked the Council on Ethics to monitor Alstom’s anti-corruption efforts and the development of its corruption prevention system over a period of four years. The Ministry of Finance has also asked the Council on Ethics to monitor how the company deals with the further investigation of older corruption cases. The Council on Ethics is also to monitor whether allegations are made of new instances of corruption. The Ministry of Finance has instructed the Council on Ethics to provide an annual briefing to the Ministry on the status of the observation process. Finally, the Ministry of Finance has asked the Council on Ethics to make a new recommendation at the end of the observation period.

The Ministry of Finance has asked Norges Bank to communicate the decision to place Alstom on the observation list and the reasons for the decision directly to the company’s board of directors.

 

Read more:

• Recommendation of the Council on Ethics
• The Council on Ethics for the Government Pension Fund Global