GLOBAL - PenSam, PFA Pension, PKA and other Danish pension funds have defended themselves against an accusation of unethical behaviour over their investments in African government bonds.

PenSam said in a statement: "We invest in government bonds from a range of African countries, and these are investments that can have intrinsic dilemmas."

A report by independent corporate watchdog DanWatch and newspaper Berlingske said Denmark's 22 largest pension funds have more than DKK600m (€80.7m) invested in bonds issued by the governments of sub-Saharan African countries.

Government corruption and oppression of the population is not uncommon in these regions, the report said, naming PenSam, Unipension, Industriens Pension, PFA Pension, PBU and ISP as being responsible for most of the controversial investments.

Berlingske has run a series of prominent reports this week under the campaign title 'blood bonds' (Blodobligationer).

PenSam said that, as a company, it was unable to evaluate individual states politically, in connection with its investment in government bonds.

"Therefore," it said, "we align ourselves with the assessments and guidelines laid down by the Danish government and the international community - the EU and the UN, for example.

"In this way, PenSam does not buy government bonds from countries affected by sanctions."
If the EU, Denmark or the UN decided to introduce sanctions against a particular country that PenSam invested in, those investments would be sold, it said.

Commercial provider PFA Pension said investors faced a dilemma between contributing to growth and development in Africa or keeping their hands completely clean and turning their backs on Africa's development needs.

The fund defended its DKK49m investment in Ivory Coast government bonds.

"The country is just getting over a civil war and is on the right path," the pension fund said in a statement. "The country wants to introduce reforms, national reconciliation, institutional reforms, etc."

PKA, which manages five pension funds, said it holds government bonds issued by South Africa, Nigeria, Ghana, Uganda and Kenya.

Although the idea that people can influence companies through ownership has gained significant ground, it said, when it comes to government bonds, political pressure is the most effective way to have an impact.

"Proposals for guidelines need to come from the political side," it said. "It won't do for us to take a leap in the dark, when one moment politicians are telling us to stay away, and the next they are instructing us to invest in Africa."

Unipension, which runs three professional pension schemes, said the debate was important and that it was working towards establishing international guidelines.

Niels Erik Petersen, head of investments at Unipension, said: "Work is being done on guidelines for government bond investments, but that times time. Therefore, we welcome political initiatives from countries that will unequivocally help the process move forward."

The DanWatch report lists pension funds that it says have investments in African countries where there is widespread corruption and oppression.

Pensions administrator Unipension has DKK188m in such investments, followed by PenSam with DKK96.5m, PBU with KK57.5m, ISP with DKK52m, PFA Pension with DKK49m and Industriens with DKK47m, according to DanWatch.

The report said most Danish pension funds have committed themselves to the ethical principles of the UN Global Compact, which focuses on human rights, anti-corruption and other matters, but that these principles were applied to investments in businesses, not in countries.

Countries such as Angola, Gabon and the Democratic Republic of the Congo were rated as fundamentally corrupt by the NGO Transparency International, DanWatch said.