EU to propose common approach to sovereign funds

BRUSSELS (Reuters) - The European Commission will use Norway as a benchmark for a voluntary European Union code to deal with state-owned sovereign wealth funds, the EU executive's president said on Monday.

Jose Manuel Barroso said the Commission would not propose legislation on dealing with such funds that have invested in sensitive industries, though it reserved the right to do so if voluntary means failed to achieve transparency.

Some sovereign wealth funds have faced accusations of investing for political purposes instead of profit.

"The Norwegian sovereign wealth fund is exemplary in terms of transparency, governance and accountability," Barroso said in a statement.

The Commission will make proposals on Wednesday for a voluntary code of conduct that could be global as well as EU-wide.

"This EU approach must also serve as a contribution to the IMF efforts to set up a global code of conduct for sovereign wealth funds and their owners. We would like agreement on that by the end of the year," Barroso said.

"Sovereign wealth funds offer opportunities. They are not a big bad wolf at the door. For example, the current financial turmoil shows that sovereign wealth funds can help stabilise financial markets," Barroso said during a visit to Norway.

Non-European funds cannot be allowed to be run in an opaque manner or used as an implement of "geopolitical strategy", Barroso said.

The Commission wants a common approach to avoid unilateral action by member states that could distort the bloc's internal market.

Its proposal will be sent to EU leaders who meet on March 13-14.