Norway’s sovereign fund feels Panama Papers heat

The world's largest sovereign wealth fund is facing scrutiny over investments in companies that employ tax havens.

Last week, some Norwegian lawmakers said they would consider examining the sovereign wealth fund's investments in companies incorporated in low tax bases as revelations continue from the Panama Papers, a massive document leak from Panama-based law firm Mossack Fonseca.

Some Norwegians joined their elected officials calling for more scrutiny over the sovereign wealth fund's investments in a push similar to one that the government rejected last year, according to Bloomberg. More than 500 people indicated on Facebook that they would attend a rally Monday night in Oslo to demonstrate against tax havens.

“We've never been closer to succeeding in getting the oil fund out of tax havens,” the event's organizers said on the Facebook page, translated by Bloomberg. “More and more people are realizing that we need to put an end to secrecy and tax evasion. Change is now possible!”

Offshore tax bases can be a legal way to skirt higher taxes, but the Panama Papers have set off an international debate about the ethics of the business practice. Part of Norway's sovereign fund's real estate unit is based in Luxembourg, and according to Bloomberg data, the fund had about $15.8 billion invested in the stocks and bonds of companies incorporated in countries on a European Commission list of the top 30 global tax havens.

A spokesperson for Norges Bank Investment Management, the part of Norway's central bank that manages the fund, told Bloomberg that more attention to the tax haven issue is beneficial.

“As an investor in more than 9,000 companies around the world, closed jurisdictions and tax evasion represent a financial risk for the fund,” Thomas Sevang told Bloomberg. “We expect the companies to exercise openness around the issue, and to receive information about how the companies relate to taxation.”

The protest came a week after Norway's Ministry of Finance proposed that its sovereign wealth fund, the Government Pension Fund Global (GPFG), raise the cap on its unlisted real estate holdings from 5 percent to 7 percent cap. The fund currently invests about 3 percent of its NOK7.471 billion (€786.3 billion; $895.3 billion) fund, according to the Ministry of Finance.