Via Financial Times

The incoming and outgoing chief executives of Norway’s $1tn oil fund are embroiled in an expenses scandal that raises questions over the leadership of the world’s largest sovereign wealth fund.

Yngve Slyngstad, who is due to step down in September after 12 years of leading the oil fund, admitted at the weekend that he should not have accepted a charter flight home from a seminar paid for by Nicolai Tangen, the hedge fund billionaire who last month was tapped to become its next head.

Norway’s central bank, which houses the manager of the fund, said it was now investigating if Mr Slyngstad had broken its ethical rules while its supervisory board is looking into whether to hold an extraordinary meeting to look at the selection of Mr Tangen.

“Yngve Slyngstad has stated that he was invited as part of the bank’s operations. Slyngstad points out that he should have taken scheduled flights home covered by Norges Bank,” said Oystein Olsen, the central bank governor who last month chose Mr Tangen as Mr Slyngstad’s successor. 

The affair raises questions about the recent selection process for the oil fund’s chief executive as well as the often cosy relations at the heart of Norway’s financial elite.

Mr Tangen’s background as a billionaire fund manager and his relations with various senior Norwegian officials were already under heavy scrutiny from politicians in Oslo. 

Norway’s attorney-general, who also attended the seminar, has to stand down in matters regarding Mr Tangen due to their friendship, the office of prime minister Erna Solberg told local media at the weekend.

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The oil fund said Mr Slyngstad was not involved in the process to pick Mr Tangen. Mr Slyngstad told VG, the Norwegian tabloid that broke the story over the seminar and flight, that he had talked to Mr Tangen about the position at the seminar and that “I can have said to him and all others that were there that we needed bright people in that position” but that he had not suggested he apply.

Mr Slyngstad added in a statement issued by the fund that he was invited to give a lecture at the seminar organised by Mr Tangen at the Wharton School of business at the University in Pennsylvania in November, just days after Mr Slyngstad announced his resignation. 

Norges Bank paid for his flight to the US and train to Pennsylvania but Mr Tangen paid for a charter flight back to Oslo for Mr Slyngstad and others, as well as his hotel and food.

“It was my decision to take this flight,” said Mr Slyngstad. “This is the first time I have flown anything other than scheduled flights covered by Norges Bank. Of course, I should have taken the train back to New York and a scheduled flight home.”

Asked by the Financial Times if he had caused trouble for Mr Slyngstad, Mr Tangen declined to comment. But he added: “When it comes to lifestyle, I see that there are things I did in my ‘old life’ which I cannot do as head of the sovereign wealth fund. For instance, I arranged a fantastic seminar at Wharton to which I invited 150 interesting people, and which I am very proud of. This would be a thing I cannot do in my new job.”

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Julie Brodtkorb, chair of the supervisory council of Norges Bank, told the Financial Times that it would decide on Tuesday whether to hold an extraordinary meeting to look into whether the executive board of the central bank followed the correct procedure in appointing Mr Tangen.

Mr Olsen, the central bank governor, told VG he had not met Mr Tangen before the selection process and that it was the headhunters Russell Reynolds who found the founder of hedge fund AKO Capital.