BDRBF Bombardier Inc (QX)

By Dominic Chopping

Norway's $1.3 trillion sovereign wealth fund has placed Canadian aircraft manufacturer Bombardier Inc. under observation for possible exclusion from the fund over ethical concerns, along with Indian port and logistics company Adani Ports & Special Economic Zone Ltd. and South Korean logistics firm Hyundai Glovis Co. Ltd.

The fund is managed by Norway's central bank, but decisions to exclude or place companies on observation are made based on recommendations from an ethics council of appointed by the Ministry of Finance.

The fund adheres to guidelines that mean it doesn't invest in certain weapons manufacturers, thermal coal miners, tobacco producers or companies responsible for environmental damage or which violate human rights, for example.

Norges Bank said in a statement late on Monday that it has placed Bombardier under observation due to "unacceptable risk that the company contributes to or is responsible for gross corruption."

According to the ethics council, investigations revealed that Bombardier or its subsidiaries can be linked to allegations or suspicions of corruption in six countries spanning over ten years, with the cases relating to bribes or suspicious transactions amounting to over $100 million used to win contracts for Bombardier's subsidiaries.

However, it said that the majority of allegations and suspicions of corruption were linked to Bombardier's transportation division, which was sold in 2021.

The fund held a 0.91% stake in Bombardier at the end of 2021, worth $29.6 million.

Adani Ports & Special Economic Zone is placed under observation due to "unacceptable risk that the company contributes to or is responsible for serious violations of individuals' rights in situations of war or conflict," Norges Bank said.

An Adani Ports subsidiary had signed a deal with a Myanmar military-owned company to build a port terminal in the country, prior to last year's coup.

The company has since said it plans to exit the project but the ethics council noted significant uncertainty about when such a withdrawal will be possible to implement.

The fund held a 0.26% stake in Adani Ports at the end of 2021, worth $53 million.

Norges Bank has also decided to place Hyundai Glovis under observation due to "unacceptable risk that the company contributes to gross or systematic human rights violations and serious environmental damage."

The ethics council said the company has disposed of decommissioned vessels by sending them to be broken up for scrap on beaches in Pakistan and Bangladesh, a process that causes severe environmental damage and where working conditions are extremely poor.

The fund held a 0.81% stake in Hyundai Glovis at the end of 2021, worth $42.9 million.

Meanwhile, Chinese sportswear manufacturer Li Ning Co. Ltd. has been excluded from the fund due to unacceptable risk that the company contributes to serious human rights violations in Xinjiang, China.

"Producing in or purchasing certain products from this region, including textiles and cotton, are associated with a particular risk of becoming involved in forced labour," the ethics council said.

The fund held 0.59% in Li Ning at the end of 2021, worth $168 million.

Norges Bank added that it has revoked the exclusion of U.K.-listed oil and gas company San Leon Energy PLC. The company has been excluded since 2016 due to risk of violating ethical norms by engaging in petroleum prospecting in Western Sahara, but these activities have now stopped, it said.

Write to Dominic Chopping at dominic.chopping@wsj.com

(END) Dow Jones Newswires

March 08, 2022 06:46 ET (11:46 GMT)

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