(First published in Norwegian 01 Oct 2004)
By Pia A. Gaarder
Neither the [Norwegian] government nor the parliament want to exclude tobacco from the Oil Fund. But now American prosecutors have started an enormous fraud case against the country's tobacco industry, and demanded damages of USD 280 billion dollars, or about NOK 1 915 billion. If the tobacco companies lose, it will mean economic ruin.
The charges are many: the industry is accused, among other things, of having known that nicotine is addictive, and knowingly and wilfully understated and denied it. The same applies to passive smoking. The consequences on human health has been big according to the prosecutors: the damage caused by tobacco smoke is behind every fifth death in the US.
The companies charged are Altria Group Inc.; Phillip Morris USA Inc.; R.J. Reynolds Tobacco Co.; Brown and Williamson Tobacco (Investments) Ltd.; Lorillard Tobacco Co,; Liggett Group Inc.; Council for Tobacco Research-USA Inc.; and Tobacco Institute.
The Norwegian Oil Fund last year doubled its investments in tobacco from barely NOK 1.5 billion to NOK 4 billion (see previous article). Two billion, or half of these investments, are in three of the American companies that risk having to pay these enormous compensation payments, specifically Altria Group Inc (Phillip Morris), NOK 1,583 million, RJ Reynolds Tobacco Holdings, NOK 21 million, British American Tobacco, NOK 464 million (according to the latest available annual reports that were made public in march 2004).
If ethical arguments have not led to the exclusion of the tobacco industry from the Oil Fund's investment universe, then purely economic reasons may be decisive, certainly when it comes to the American companies.
Norges Bank does not want to comment at this time on whether they will disinvest.
"We are now awaiting the ethical guidelines that the department will implement according to the parliament's handling of the government's proposal for ethical guidelines for the Petroleum Fund," says Norges Bank's information officer, Poul Henrik Poulsson.
In other words, the possibility that Norges Bank will withdraw its investments form these American tobacco companies on purely economic grounds cannot be excluded?
"We will communicate on the concrete investments exclusively through the annual report," says Paolsson.