NORWAY – Mercer Investment Consulting has not made qualitative comments in its latest annual report into Norway’s 845.3 billion-crown (97.9 billion-euro) Petroleum Fund.

The new report does not contain comments on the management of the fund in the same way as the 2003 review.

Last year, Mercer evaluated the way Norges Bank Investment Management ran the fund operationally in what it called a “big picture” approach. Its report, while broadly positive, made some critical comments.

These included queries over NBIM’s short-term “trading” approach to the management of the fund, manager selection and turnover in senior management.

Mercer says the purpose of the 2004 report, by contrast, is to “verify Norges Bank’s internal performance measurements and to strengthen the Ministry’s basis for evaluating the competence and actions of Norges Bank”. This purpose was set out in the public procurement document, it said.

Knut Kjaer, executive director of NBIM, referred questions – including whether the consulting firm was asked to limit the scope of its 2004 report or whether it had previously misinterpreted its brief - to the finance ministry.

A finance ministry spokesman said the econmic policy department would be able respond to the queries next week.

Mercer’s investment consulting and human resource consulting executives in Norway, as well as its Oslo-based spokesman, were not able to comment.

The 2003 assessment, which Mercer said was the first of its kind given to an external consultant by the Ministry of Finance, followed six days of meetings with staff and management.

The Petroleum Fund made its highest ever return in 2003, 12.6%, beating its benchmark by 0.59 basis points. The fund releases its latest quarterly report on May 24.

Meanwhile, the government has proposed new ethical guidelines for the fund in the revised national budget.

The guidelines comprise three elements: exercise of ownership rights, negative screening and exclusion. Norges Bank would be responsible for the implementation of the corporate governance policy, while the Ministry of Finance will be responsible for decisions about the ethical constraints on the Fund’s investment universe.

“The Ministry of Finance will establish an external council to advise the Ministry on negative screening and exclusion under the ethical guidelines”

It emerged yesterday the Mercer Investment Consulting in the US is cooperating with the Securities and Exchange Commission’s investigation into the pay arrangements of pension fund consultants in the US.