Norges Bank Considers Revoking Offer To Incoming Wealth Fund CEO After Left Wing Outrage Campaign

The scandal unfolding at Norway’s $1 trillion sovereign wealth fund, one of the largest piles of oil capital in the world, is beginning to look less like an unseemly glimpse into the incestuous world of Norway’s elite, and more like a textbook case of a cynical tabloid press emboldening critics on the far left.

On Friday, outgoing fund CEO Yngve Slyngstad’s delivered an apology that surprised even the financial press with its seeming sincerity. In it, Slyngstad mused about how one bone-headed decision had destroyed the public trust he had carefully built over two decades.

Julie Brodtkorb, chair of the supervisory council of Norges Bank, has said the central bank will decide by Tuesday whether to hold an extraordinary meeting to look into whether the executive board of the central bank followed the proper protocols in appointing Tangen. But we suspect they will find that the proper procedures were, in fact, followed, since Tangen’s explanation of how he ended up with the job has been widely corroborated, and clearly rules out a quid-pro-quo, an idea that was, as we said, pretty tenuous to begin with.

The fact is, Tangen is making an enormous financial sacrifice to accept the position to lead the sovereign wealth fund. He will take a huge pay cut, and will also be forced to pay Norway’s onermous wealth tax, something his annual salary won’t even cover. He’s essentially paying to hold the job, something Tangen – a native Norwegian – once called “a dream.”

However, the press and Norway’s political establishment are all furious at Tangen for organizing an extravagant seminar at his alma mater, the University of Pennsylvania’s Wharton School, where Slyngstad and several other Norwegian power players (including the country’s attorney general) attended. Slyngstad attended the seminar shortly after announcing his decision to step down from the leadership of the sovereign wealth fund, a decision that triggered a scramble by the central bank to find a successor who was as well-qualified as Slyngstad.

Details about the seminar (which included performances by Sting and Gregory Porter) were published by a Norwegian tabloid, which kicked off the scandal. Many on the left raised an eyebrow when the central bank announced that it had appointed Tangen to take over the fund. The staid Norwegian culture leaves little room for Tangen’s flashy hedge funder lifestyle. Bloomberg reported that many Norwegians might “struggle to regard Tangen as a public servant” because of the coverage.

The crux of the scandal at the central bank is that Tangen’s decision to invite Slyngstad, and then fly him back to Oslo on a private jet, a decision that he said was made to save Slyngstad the trouble of taking a train back to New York from Pennsylvania to catch a flight back to Norway, was read as a possible quid pro quo. However, that’s a pretty tenuous connection to begin with: the gift, while seemingly excessive to the common man, is merely a rounding error for Tangen.

Plus, the timeline of events, as well as the explanations supplied by Tangen and Slyngstad, appear to support their claims that there was no quid pro quo, and that Slyngstad didn’t have much, if any, role in selecting Tangen as his replacement.

Tangen said he didn’t apply for the position of leading the sovereign wealth fund; instead, he was contacted by head hunters from executive recruitment firm Russel Reynolds. That story has been corroborated by everybody involved.

In an effort to “make things right,” the Norges Bank has insisted on reimbursing Tangen for the cost of Slyngstad’s flight and seminar attendance. What we want to know is: How is sticking the Norwegian taxpayer with the tab for these extravagances supposed to quell their anger? Then again, we aren’t Norwegian, and don’t have any first-hand experience with the culture.

Still, the affair has dominated Norwegian media, thanks largely to left-wing politicians and union leaders who are now insisting that the central bank reconsider Tangen’s appointment, arguing that the ‘jetsetter’ isn’t the right candidate for Norway. Norges Bank’s Supervisory Council, the wealth fund’s watchdog, has given the central bank until April 29 to answer a list of questions surrounding the recruitment process.

These criticisms, however, fail to take several important factors into account: As we mentioned above, Tangen is making personal sacrifices in terms of his wealth just to accept the decision, which undermines the quid-pro-quo argument, since Tangen has nothing to gain – reputationally or financially – from taking the job. He says it’s a personal dream of his to run the fund. There’s no reason to doubt this.

In reality, these outraged left-wingers are hurting Norway: Knut Kjaer, the founding CEO of the wealth fund, told the FT that hiring Tangen was “a stroke of luck” for the fund. As we mentioned above, many feared that someone as qualified as Tangen wouldn’t emerge, despite the fund’s largess.