BRUSSELS, March 13 The European Union's top business lobby backed the idea of a voluntary code of conduct for cash-rich state-owned wealth funds but Denmark said it should only be a first step to mandatory rules.
Sovereign wealth funds (SWFs) hold an estimated $2.5 trillion generated by booming commodity and energy exports as a massive treasure chest for investment in companies.
SWFs from Russia and China have been eyeing EU firms, prompting France and Germany to fear that such funds were more interested in influencing strategic sectors than by profit.
BusinessEurope President Ernest-Antoine Seilliere said operators in the global capital market should not come under suspicion just because they are rich.
"We understand there are some political views on that and we support those who think about possible codes," he told Reuters.
EU leaders meeting in Brussels on Thursday and Friday are set to agree that the 27-nation union should remain open to sovereign funds -- some of which have helped shore up troubled Western banks recently -- but that their behaviour should be in line with a globally agreed code of conduct.
Danish Prime Minister Anders Fogh Rasmussen said tougher action was needed.
"A voluntary code of conduct is not enough in the long run. We need a global regulation. An EU regulation would not be enough," Rasmussen told Reuters.
"A code of conduct would be a point of departure and talks on a global framework should follow. We need more transparency."
Denmark is worried about the investment patterns of SWFs although deals done on market terms pose no problem, he added.
The International Monetary Fund is due to unveil a draft global code of conduct later this year containing principles on governance and transparency in investment strategies.
"We believe those who are willing to invest do it to be profitable, to help the companies to develop, and we don't suspect them automatically to be doing something else," BusinessEurope's Seilliere said.
Finland's Prime Minister Matti Vanhanen said Norway's fund was a transparent model for others to follow, in particular its rules that limit it to only small stakes in the companies it invests in.
"We hope all these funds will have this type of transparent rules," Vanhanen told reporters.
Norway's SWF puts a 5 percent limit on investment in individual companies, but the average ownership stake is only about 0.5 pct. The fund takes no large or "strategic" ownership stakes. (Editing by David Cowell)