EU wants code of conduct for sovereign wealth funds

BEIJING, Feb 25, 2008 (AFP) – The European Union wants a global code of conduct for sovereign wealth funds to ensure transparency and good governance, EU Trade Commissioner Peter Mandelson said Monday. Mandelson’s remarks, made during a visit to Beijing, come as the clout of funds such as the cash-flush China Investment Corp. are rapidly on the rise in global financial markets.

“We in Europe should welcome such investment from China and other wealth funds, and not reject it,” Mandelson told AFP.

“But we need everyone to agree a code of conducts and principles governing the behaviour of these wealth funds, which provides for transparency and good governance.”

The focus on sovereign wealth funds has sharpened markedly in recent months, as funds from Asia and the Middle East have emerged as eager buyers of western assets, such as financial institutions made cheaper by the US subprime crisis.

Concerns have started multiplying in the United States and Europe that the funds are not transparent enough, and that they could potentially be used as political tools by their respective governments.

“This code should be a voluntary one and it should preferably be an international one, rather