In Davos last week, Mervyn Davies, the chairman of Standard Chartered, said sovereign wealth funds should together draw up a code of conduct to govern their investment behaviour.
If they don't, the state-backed SWFs, which control assets worth at least $2,000bn, risk being branded "irresponsible".
This is significant. Standard Chartered is 18 per cent owned by Temasek, one of Singapore's massive SWFs. So government-run wealth funds in Asia and the Middle East may indeed be mulling agreed minimum standards on transparency and governance.
That would cool nerves in the West, where SWFs have recently splashed out $40bn refloating several "thoroughbred" banks caught up in the sub-prime mess.
Everyone wants SWFs to be "responsible". But what does that mean? The view in Davos, at least among Western delegates, is "responsible" means not only "transparent" but also "passive". I'm not sure I agree.
Examining the ownership structure of big Western investment banks, it's striking how many have lots of small shareholders - often other investment banks! - with few holdings of significance. Managers like this as they get to rule the roost.
But the resulting lack of meaningful outside control is very dangerous - witness sub-prime, rogue traders etc.
When it comes to SWFs funding Western ports, energy facilities and other truly strategic assets, let's talk about "passive" investment. But Western financial institutions? I don't think so.
By Liam Halligan
© The Telegraph
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