Funds News

Norway fund sells Israeli shares on ethical grounds

OSLO (Reuters) - Norway's sovereign wealth fund has sold its stake in Israeli company Elbit Systems ESLT.TA because it supplied surveillance equipment for the separation barrier in the West Bank, the government said on Thursday.

The $400 billion-plus(244.3 billion pounds) fund follows ethical guidelines set by the government, and has in the past ruled out investing in some two dozen firms that produce nuclear arms or cluster munitions, damage the environment or abuse human rights or workers’ rights.

But the removal of Elbit from the fund’s portfolio was linked to criticism of the Israeli government’s policies and actions, making it a more political decision than previous exclusions by the fund.

“We do not wish to fund companies that so directly contribute to violations of international humanitarian law,” Finance Minister Kristin Halvorsen said in a statement.

“The freedom of movement of the people living in the Occupied Territory has been unacceptably restricted,” she said.

The International Court of Justice has ruled that the barrier breaches the Fourth Geneva Convention and “Norwegian authorities act in accordance with this,” Halvorsen said.

The barrier cuts across the West Bank, one of the Palestinian territories seized by Israeli forces in the 1967 Middle East War and occupied by Israel ever since.

Israel says it was built to prevent suicide bombers entering Israel and has largely succeeded in doing so. In some places it has cut off Palestinians from their farmland and places of work, adding to the problems they face in living under occupation.

The fund, managed by the central bank and set up to make productive use of Norway’s oil wealth, sold all its shares in Elbit, worth some 36 million Norwegian crowns (3.6 million pounds), before the firm’s exclusion from the fund was announced, the statement said.

In Israel, Elbit officials were not immediately available for comment.

Halvorsen said the government’s ethics council generally bases its evaluation on a company’s conduct, not on possible violations committed by states or other entities, but Elbit’s activities could be linked to “violations of human rights”.

“The council has assessed the extent to which companies can be regarded as contributing to human rights violations committed by states in previous cases too, such as companies’ activities in Burma,” her statement said.

Norway says the surveillance system supplied by Elbit to the Israeli authorities “is one of the main components in the separation barrier and its associated control regime.”

“The surveillance system has been specially designed in close collaboration with the buyer and has no other applications. Furthermore Elbit is clearly aware of exactly where and how the system is intended to be used,” she said.

Editing by Tim Pearce