News

The government of Germany has introduced a draft law to monitor, restrict or even block foreign investment if it is deemed a danger to the country’s interests. This draft legislation released in the midst of the financial crisis will regulate investment by alternative assets, namely sovereign wealth funds(SWF). UNI Global Union welcomes the initiative by Germany to monitor investment activity. UNI hopes further efforts will be made to scrutinize investment by SWF, private equity and hedge funds in:

• the inclusion of labour standards in investment strategies
  
• improved transparency in investment decisions and consultation with workers
  
• promoting socially responsible investment in alternative assets
  
• closing tax loop holes for alternative assets to make a fair contribution

The German government has introduced the law to dampen fears over investment by state owned sovereign wealth funds. If passed it could allow the government to scrutinize investments made in companies with shares of 25% or greater, if investing in areas deemed to be “a threat to public order or security” says a statement from the ministry. Although some SWF such as the Norwegian Government Pension Fund-Global operate transparently, under ethical guidelines and with an average investment allocation of 5% or less, many other SWF do not. This is the reason for the concern.



The US and European Union (EU) have similar laws to Germany’s new draft legislation. In the US similar laws were used to block China’s bid to invest in a Californian oil company. More recently Dubai Ports was blocked from buying shares in New York ports. The EU has its own legislation that has allowed it to bar Russia’s Gazprom from buying energy assets in Europe. The European Commission however has requested to review the German laws to ensure it does not breach EU trade arrangements. The law is expected to be passed in Germany and active by January 2009. UNI hopes more national and world regulators will seriously look into SWF activity in terms of labour standards and responsible investment practices.