Large sovereign funds are being encouraged to adopt a "code of ethics" The governments in the US and UK are particularly interest in this. Their concern is based around the big money from China, the Middle East, and Singapore taking huge positions in larges banks and public companies and using that ownership to push their political agendas.
The sovereign funds insist that all of their investments are merely financial. The companies into which they place money have nothing to fear. It is like the Mitt Romney comment about his religion. His church will not dictate government policy.
According to The New York Times "leaders of funds in Russia, the Middle East, China and other parts of Asia say that the West’s demand for regulations is hypocritical in light of the failure to regulate European and American banks and hedge funds." It is tautological reasoning that two wrongs can make a right.
Sovereign funds have no place to put billions of dollars if they are going to avoid investing in companies based in the major developed countries because government wants a role in overseeing them. There argument is that troubled financial institutions need their capital. But, the power of legislation can trump that. Whether is is right-headed of not, the Congress can say "stay out of our businesses unless you sign up for investing that is transparent and does not compromise the national security." Otherwise, go invest in Venezuela.
Douglas A. McIntyre
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