CEO of Norway’s $1 trillion sovereign wealth fund gives up control of own fortune
The man set to run Norway’s $1 trillion sovereign wealth fund has agreed to give up control of his personal assets in an effort to appease critics.
Norges Bank, which manages the fund, hopes the terms of a contract presented on Thursday will end concerns over potential conflicts of interest stemming from Nicolai Tangen’s current job and private fortune.
The London-based hedge-fund manager, whose personal wealth is estimated at over $860 million, is due to start as CEO of the world’s biggest wealth fund on September 1.
Tangen’s appointment has been mired in controversy since it was announced in March. He wasn’t on an official list of candidates, and Norges Bank’s watchdog has since directed harsh criticism at the hiring process. It is due to respond to the contract on June 11.
Norges Bank Governor Oystein Olsen told reporters in Oslo he expects the wording in the contract to put the watchdog’s concerns to rest. The process had been “difficult,” but Olsen said he’s “quite convinced that we’ve done the right thing, we have found the right person.” Now, he expects the “storm will sort of fade off,” he said.
Norges Bank needs to convince the watchdog that Tangen’s contract guarantees a Chinese Wall between his personal interests and his role as head of the wealth fund. The watchdog also pointed to the use of tax havens by Tangen’s firm, AKO Capital LLP, as an issue that needs to be addressed.
Local media have devoted considerable attention to documenting Tangen’s seemingly ostentatious life. A Norwegian tabloid published details of a lavish event he hosted last year, attended by several top Norwegian officials, including the outgoing CEO of the wealth fund, which raised more questions about his hiring process.
Despite the controversy, Tangen’s credentials as an investor capable of leading Norway’s vast wealth fund are largely undisputed. Knut Kjaer, the founding CEO of the fund, has described Tangen as a “global talent from the world of finance,” and says Norway is lucky to have him.
Tangen’s contract states that his voting rights in AKO will be cut to 43 percent, and his holdings will be handled by Norwegian asset manager Gabler Investments AS. Tangen will be paid an annual salary of 6.65 million kroner, or roughly $670,000, which he has previously said will only cover a fraction of the wealth tax he faces in Norway.
Speaking to reporters in Oslo, Tangen said he has “no plans to return to AKO” after running Norway’s sovereign wealth fund. At the same time, he said it was never an option to exit his stake completely, for example by moving his personal investments to Norwegian assets, which the wealth fund can’t hold.
The Supervisory Council, which is designated by parliament to control Norges Bank, doesn’t have the power to block Tangen’s appointment, but its comments will be closely watched, and straying too far from its recommendations could lead lawmakers and the government to get involved.