Supplier of military materials to Burma excluded from Government Pension Fund – Global

The Ministry of Finance has excluded the Chinese company Dongfeng Motor Group Co. Ltd from the Government Pension Fund - Global, based on advice from the Council on Ethics. The company sells military trucks to Burma. “We cannot finance companies that support the military dictatorship in Burma through the sale of military materials,” says Minister of Finance Kristin Halvorsen.

The Ministry of Finance amended its ethical guidelines in October 2008. “These changes meant that the fund’s assets can no longer be invested in companies that sell weapons or other military materials to Burma, and this is the first time the new exclusion criteria regarding the sale of weapons and military materials to Burma has been applied,” says Halvorsen. 

The Council on Ethics refers in its advice to the criteria applied in the EU’s and the USA’s weapons embargoes directed at Burma. The EU operates wide ranging exclusion criteria that specifically mention military vehicles and their spare parts. The American prohibition is directed at any product that has a significant military application, and that has been manufactured or adapted for military purposes. The Council on Ethics has looked to these definitions in its advice and concludes that the sale of trucks to the Burmese military would be in contravention of the ethical guidelines for the Government Pension Fund - Global.  

The Council on Ethics refers to the fact that it has become known that a large number of military trucks manufactured by Dongfeng have been observed at the border crossing between China and Burma. Norges Bank has written to the company about this. The response from Dongfeng revealed that a subsidiary company sold 900 trucks to Burma during the first half of 2008. 

The Council on Ethics finds that the trucks have been adapted for military purposes and moreover have significant military applications. They must therefore be considered to be military materials. The Council also bases its advice on deliveries being ongoing and that there will be deliveries of spare parts in the future. Against this background, the Council on Ethics concludes that investment in Dongfeng is in contravention of the ethical guidelines.

On 19 December 2008, the Ministry of Finance instructed Norges Bank that Dongfeng should be excluded from the Government Pension Fund - Global and gave 28 February 2009 as the deadline for completion. The sale of all shares in the company has now been completed. According to Norges Bank, before selling the shares, the fund owned shares in the company worth approximately NOK 30 million. The decision to sell was made public after the shares had been sold, so as not to affect the sale.

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Read more:
The recommendation from the Council on Ethics
Companies Excluded from the Investment Universe
The Council on Ethics for the Government Pension Fund – Global