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is stated, has ‘operated predominantly as a passive investor, with the overwhelming share of its portfolio consisting of minority stakes in companies that have included no control rights, no board seats and no involvement in the management or direction of the receiving companies.’83 The phrasing is instructive in its ambiguity. The passivity is predominant but not exclusive. It is unclear whether the portfolio balance is based on size or value. Furthermore, the lack of control, board representation and directional guidance may not necessarily be used in all cases. More generally, it is mistaken to believe that the absence of voting rights precludes the exertion of influence. No entrenched management team is likely to ignore the voice or (perceived) interests of significant shareholders. The problem is that the current lack of disclosure means that there is no way of knowing what advice, if any, has been dispensed. Likewise there is no ongoing mechanism to hold the fund to account.

Along with the mollification has come an unsubtle warning. The ADIA cautions that ‘in a world thirsty for liquidity, receiving nations should be mindful of the signals sent through protectionist rhetoric and rash regulation.’84 The chairman of Dubai World has argued that the introduction of formal regulatory oversight is unwarranted and contrary to the interests of recipient states.85 Similarly, the chief executive of Dubai International Capital, which holds strategic stakes in both Standard Chartered and HSBC, has bluntly stated that leading investment banks may not be able to survive without Sovereign Wealth Fund financing. He told a conference ‘it would take a lot more money [than already secured from Abu Dhabi, Singapore and Kuwait] to rescue Citigroup’,86 one of the most over-extended investment houses and the first to seek recapitalisation. Similar sentiment is evident in Beijing. The vice president of the China Investment Corporation, Jesse Wang, has expressed irritation at the calls for a code of conduct, saying it was ‘unfair’ and that ‘the claims that Sovereign Wealth Funds are causing threats to state security and economic security are groundless. We don’t need outsiders to come tell us how we should act.’87 The International Monetary Fund is exceptionally cognisant of the sensitivities involved in brokering a solution. It has signalled that a heavy-handed one-sided approach could backfire. The IMF Deputy Managing Director, John Lipsky, has argued that ‘if there were a sense that somehow “best practices” were decided by someone else and dictated [to the funds], that could be extremely counter-productive.’88 It was against this volatile background that the





85 Sultan Ahmed Bin Sulayem argued that ‘If somebody comes with regulations that make it difficult for someone from certain geographical locations to invest in Europe or the west, people will take their investment somewhere else.’ He also claimed however that political interference was a red herring. ‘If you put a politician in charge of an investment, believe me, that investment fund will not last for a very long time.’ See British Broadcasting Corporation, ‘Dubai Fund Hits Back at Criticism’, BBC News (London), 29 February 2008 <http://news.bbc.co.uk/1/hi/business/7271007.stm> at 12 March 2008.

86 M Sleiman and A Critchlow, ‘Dubai Firm’s Chief Says Citigroup Needs More Cash’, Wall Street Journal (New York), 4 March 2008 (Online edition).

87 V Ruan, ‘China’s Investment Fund Pushes Back’, Wall Street Journal (New York), 7 March 2008, A6; E Wong, ‘An Emboldened China Scolds US Over Economy’, International Herald Tribune (Paris), 17 June 2008, 1; see more generally, S Schwartzman, ‘Reject Sovereign Wealth Funds At Your Peril’, Financial Times (London), 20 June 2008, 13.

88 B Davies, ‘US Pushes Sovereign Funds to Open to Outside Scrutiny’, Wall Street Journal (New York), 26 February 2008, A1.


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