August 23, 2010 / 11:46 AM / 9 years ago

Norway oil fund excludes 2 Israeli companies

* Excludes Africa Israel, Danya Cebus

* Also blacklists Malaysian forestry firm Samling Global

* Says Danya has built Israeli settlements in occupied areas

* Norway opposition says fund officials "riding high horse"

(Adds reaction, background, quotes)

By Walter Gibbs

OSLO, Aug 23 (Reuters) - Norway excluded two Israeli firms from its $450 billion sovereign wealth fund Monday, saying it would be unethical to invest in the companies because they have helped build Israeli settlements on occupied Palestinian land.

The holding company, Africa Israel Investments (AFIL01.TA), and its construction subsidiary, Danya Cebus, were blacklisted from the fund. Norway’s Ministry of Finance also said it would no longer invest in Malaysian forestry company Samling Global Ltd (3938.HK) because of some of its logging activities.

The ministry said in a statement the construction of Israeli settlements in occupied areas "is a violation of the Geneva Convention relative to the protection of civilian persons in time of war".

The Government Pension Fund Global — Norway’s repository of oil revenues — follows ethical guidelines set by the government. Among the companies it refuses to invest in are those that produce nuclear weapons or cluster munitions, damage the environment or abuse workers’ rights.

The ministry’s investment exclusions, which now extend to almost 50 companies, are largely supported by the parties in Norway’s centre-left governing coalition.

However, Christian Tybring-Gjedde, a member of parliament for the opposition Progress Party, said Norway’s sovereign wealth should be invested to maximize return not to change the world.

He said fund officials were "riding a high horse" and said the push to exclude the Israeli companies came from the Socialist Left Party, which is in the coalition government.

"They are very anti-Israel, and this is one of their favourite pursuits, criticising Israel for everything," said Tybring-Gjedde.

He said to be consistent the ministry should also pull investments across the Arab world, where he said women and religious minorities face human rights violations worse than what the Israeli companies are accused of doing.

Aslak Sckanke, senior adviser to the Norwegian wealth fund’s Council on Ethics, said his organization examines corporate ethics, not national policies.

Sckanke also said the fund had increased investments in Israel more than tenfold over the past three years, to about 2 billion Norwegian crowns ($320.8 million). Its Africa Israel stock was worth 7.2 million crowns ($1.16 million) before divestment.

"In no way is there a boycott of Israeli firms," he said. "That is an absurd claim. We look at what companies do, not where they are from."

A spokesman for Africa Israel said the company was no longer building West Bank settlements.

"Africa Israel and its subsidiaries for some time have not been involved in real estate development or residential building in settlements in the West Bank," the spokesman said in a statement. "Therefore, the claims raised by the Norwegian government’s pension fund are baseless."

Schanke said that made no difference.

"We are not claiming that they are necessarily involved in this today," he said. "We believe that given the past practices of the company there is an unacceptable risk of a future contribution to such activities."

The ethics council’s chairwoman, Gro Nystuen, said Africa Israel ignored repeated inquiries from the council before the decision to dump shares was taken.

Samling Global could not be immediately reached for comment.

Israel’s Elbit Systems, the other Israeli company on the blacklist, was excluded last year. It fell foul of the fund’s ethical rules by providing surveillance equipment for the controversial barrier separating the West Bank from Israel. (Additional reporting by Ari Rabinovitch in Jerusalem; Editing by Karen Foster) ($1=6.234 Norwegian Crowns)

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