(Bloomberg) -- The world’s biggest sovereign wealth fund faces serious questions over the conduct of its outgoing chief executive and the selection process of his successor amid a scandal involving a luxury jet and a private performance by Sting.
CEO Yngve Slyngstad has had to explain why he accepted a flight paid for by Nicolai Tangen, the hedge-fund manager who was eventually tapped to succeed him. The development has now prompted the central bank’s watchdog to look into convening an emergency meeting to examine more closely the circumstances under which Tangen was selected.
The revelations have stunned Norwegians and created the appearance of scandal around one of the country’s most revered institutions. Tangen’s appointment had already raised eyebrows. To some, his jet-set lifestyle seemed at odds with the spirit of a fund created to safeguard the savings of an entire nation.
The Supervisory Council of Norway’s central bank, which oversees the $1 trillion fund, will try to find out whether the events “represent a breach of regulations applying to Norges Bank’s activities,” its head Julie Brodtkorb, said in a text message on Monday.
The central bank published a long overview of the hiring process on its website, including the entire history of email exchanges between Slyngstad and Tangen. It also said it had decided to try to refund Slyngstad’s expenses.
Closed Conference
Tangen is due to take over as CEO in September. Slyngstad announced last October he intended to step down after leading the fund for 12 years, during which time he generated record returns.
At the center of the affair is a closed conference paid for by Tangen that took place in the U.S. in November. Besides Slyngstad, the event was attended by several other top-ranking Norwegian public figures. Tangen’s subsequent appointment as CEO of Norway’s wealth fund was a surprise when it was announced last month, because he never appeared on any official list of candidates. He was first contacted by a head-hunting firm in December 2019.
Norges Bank says Slyngstad wasn’t involved in the recruitment process. Tangen has since told newspaper VG that he planned the seminar back in 2018, before it was known that Slyngstad’s job would be up for grabs.
Tangen, the founder of a $16 billion investment firm called AKO Capital LLP whose funds are registered in the Cayman Islands, contacted Slyngstad by email in January to ask about the job, Dagens Naeringsliv reported on Monday. In the email, later published by the bank, he referred to their encounter at the seminar in November. Slyngstad never replied.
An excerpt from the Jan. 6 email:
“Hi Yngve, (...) I was wondering if I might ask for a small favor? Your shoes as head of NBIM will be very hard to fill, but someone has to try, and we touched briefly on that in Philadelphia. Would you have 30 minutes at some point to tell me what the job entails in terms of political guidelines, opportunities and that sort of thing?”
Slyngstad was invited to the event in an official capacity as a speaker, said Oystein Olsen, the governor of the central bank.
“Slyngstad points out that he should have taken scheduled flights home covered by Norges Bank,” Olsen said in an email. “Norges Bank will now review the journey to ensure that it is dealt with in accordance with the bank’s ethical rules.”
Norges Bank covered the cost of Slyngstad’s flight to New York and his train ticket to Pennsylvania to attend the conference at the Wharton Business School. Slyngstad then flew back on the plane chartered by Tangen “due to practical considerations,” according to Norges Bank Investment Management, the unit that manages the fund.
Sting Concert
The event included a private performance by Sting, at a cost of $1 million, which was also paid for by Tangen, according to VG.
Another passenger on the flight paid for by Tangen was his long-time friend, Attorney General Fredrik Sejersted. The office of Prime Minister Erna Solberg said on Sunday that Sejersted would no longer be called on to advise in matters concerning Tangen, given the ties between the two. Minister of Labor and Social Affairs Torbjorn Roe Isaksen, then in charge of trade and industry, also participated in the event, though the government paid for his travel and accommodation.
For Slyngstad, such events are normal and part of the job of the CEO of the wealth fund, it said.
“Slyngstad has wide-ranging contact with other funds and investors,” the fund said. “Nicolai Tangen is, as the head of AKO Capital, one of the people with whom it is natural for Slyngstad to be in contact with. The contact between Tangen and Slyngstad has been based on their professional roles as leaders of their respective organizations.”
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