NORWAY - The $240bn (€184.73bn) Norwegian Government Pension Fund  Global has come under fire for its investments in an Israeli energy firm.

Martin Henriksen, leader of the youth branch of the Norwegian Labour Party (AUF), has strongly criticised the fund's investment in Israeli Electric Corporation (IEC) and in Israel AID bonds and challenges the finance minister to withdraw Norwegian oil money from Israeli companies.

"We are critical of the Norwegian Pension Fund's investments in the Israeli companies, because we think that like this the fund indirectly helps the Israeli government finance the building of the wall and the occupation of the West Bank," Henriksen told IPE this morning.

In 2005 the fund invested NOK120m (€14.46m) in the IEC, 99.85% of which is owned by the State of Israel, and NOK184m (€22.18m) in Israel AID, according to the AUF.

In a statement, the Norwegian Ministry of Finance said: "It is the Ethical Council who evaluates whether investments in specified companies are inconsistent with the ethical guidelines. The Ministry of Finance makes decisions on exclusion of companies from the Fund's investment universe based on recommendations of the Council. The Ministry's decision and the recommendation of the Council will only be made publicly available after the disinvestment has been completed."
The fund's investment manager Norges Bank commented that it had not received any recommendations from the ethical council to pull out of the companies and hence it will continue to invest according to its guidelines.

"New figures with an updated and complete list of our holdings will be released in the next annual report on 27 February," a spokesperson said.

Last year the fund was in the news several times for screening its investments: in June 2006 it for instance decided to divest from Wal-Mart over alleged abuses of workers' rights.

In December the Norwegian Ministry of Finance announced it excluded the South Korean company Poongsan Corporation from the pension fund due to the firm's involvement in the production of cluster munitions.

Also, commenting on today's reports that the pension fund is cutting its bond portfolio in order to raise its equity holdings, Norges Bank said that it has merely made recommendations to the ministry with regards to extending the fund's equity portions and considering alternative investments to spread risk.

The Ministry of Finance has announced that the equity portion will be evaluated, and according to the Norges spokesperson it is likely the matter will be discussed in the Norwegian parliament later on this year.