Sovereign wealth funds (SWFs) are not a new concept. But the increased scepticism about the true intentions behind investments means even the activities of transparent sovereign pension funds are coming under scrutiny by domestic authorities.

The need of investment banks for immediate financing in light of the sub-prime crisis opened some of the financial sector's largest institutions - Merrill Lynch, Morgan Stanley and most recently UBS - to cash injections from SWFs in China, Singapore, Korea and the Middle East. And although there were questions about the intentions of SWFs in these circumstances they were muted, perhaps in part because the inflows prevented market fears from extending further.

Meanwhile, the Canadian Pension Plan, that has always argued it is not a SWF and has sought to be transparent about its investment intentions, has hit a stumbling block that could be an indication of the fear factor huge sovereign asset funds generate. After months of complex negotiations with management and shareholders, an agreement to buy a 39.2% share in Auckland International Airport was vetoed by the New Zealand government.

New Zealand's overseas investment office said factors in its rejection were jobs, export receipts, investment for development purposes and state control of strategically important infrastructure.

The Canada Pension Plan Investment Board (CPPIB) has always maintained it has no political agenda and seeks merely to diversify the pension plan's investments. Yet this move is perhaps symptomatic of a wider problem which is surfacing across the globe and which international bodies are flagging as reasons why future deals could be rejected.

The OECD, for example, has issued guidance to countries on how to treat investments from SWFs fairly, urging governments to show "restraint" when protecting "essential security" interests. The recommendations were made in response to a request from the G7 finance ministers and OECD countries to "develop guidance for recipient countries' policies toward investments from these funds".

Similarly, EU leaders called on March 14 for an international code of conduct governing SWFs that would allow national governments to protect their defence industries. And a voluntary code is being produced by the IMF that would require sovereign investors to disclose details on their assets, their investment strategies and state how they do not exert political influence.

Most sovereign pension funds are likely to already being employing any international guidelines these bodies come with as part of their governance policy. But given that ‘energy' is being included in national security protection, there could be yet be further restrictions placed on non-politicised sovereign pension funds as they seek to redistribute their wealth for diversification purposes.

Unlike CPPIB, the Norwegian, Swedish, and Irish pensions investment boards have yet to be prevented from adding key investments to their portfolios. But Russia and China are being treated with suspicion. Russia is developing a pensions buffer fund with overseas investment potential while Chinese pension fund officials recently announced they intend to double investment to CNY1trn (€89.77bn) by 2010 and invest further in the "finance, transport and energy sectors".

In a recent speech to a conference in Norway, European commissioner for trade Peter Mandelson conceded "there is nothing inherently suspicious about sovereign wealth, or the desire to invest it productively", but suggested the debate around SWFs may have escalated over the past six months because the "biggest new funds are in economies which have raised some sensitivities in our own politics".

He argued that Chinese investment vehicles and the Russian stabilisation fund, in particular, "are new investors with huge reserves backed by governments with mixed democratic credentials, substantial foreign policy projection and no track record as investors".

Norwegian finance ministry secretary-general Tore Eriksen suggested to the same conference that Norway's Government Pension Fund - Global had a "positive influence" on international financial markets.

He said Norway could see no cause for introducing regulations which would "restrict the present investment activities of our fund", and warned that limiting the investments of oil-related SWFs would increase the "relative attractiveness of saving in the form of keeping oil in the ground would increase", which could indirectly destabilise the oil market.