Notes

• The main mechanism for both financial and nonfinancial disclosure is the

SIF’s annual report, although the SIF also provides salient information in ancillary documents usually published on the website. SIFs generally adopt either the global IFRS or local standards. Best practice dictates that the SIF be audited by an independent, well-reputed firm under the supervision of the board’s audit committee, although public capital SIFs are sometimes audited by the state comptroller and auditor general.

NOTES

1. Ang (2010, 6) discusses the issue of legitimacy with respect to sovereign wealth funds, but equally applicable to SIFs. He clarifies that, although transparency can enhance legitimacy, it is “neither a necessary nor sufficient condition to meet the legitimacy benchmark.” 2. These consequences can vary depending on political and governance structure (De Belis 2011; see also gelpern 2012). The conditions for accountability are discussed more in chapter 4. 3. According to TAI (2017), aspiring for transparency requires that information supplied be relevant, accessible, timely, and accurate. 4. See discussion in chapter 4; note that the transparency and disclosure framework also protects the fund manager from external or political pressures to deviate from the mandate by making visible the long-term mandate and investment policy of the SIF. 5. State capitalism is defined as “the use of government controlled funds to acquire strategic stakes around the world” (Lyons 2008). 6. The china Investment corporation took a 10 percent stake in uS investment bank morgan

Stanley; the Abu Dhabi Investment Authority injected uS$7.5 billion into citigroup during the early stages of the financial crisis, followed by a uS$12.5 billion investment by

Singapore’s gIc Private Limited and the Kuwait Investment Authority acting as part of a consortium; and Temasek, also of Singapore, bought a uS$5 billion stake in merrill Lynch (gopolan 2019). 7. For more discussion on the trend of sovereigns in investing across borders, see Rose (2008). 8. For a summary of the act, see https://home.treasury.gov/system/files/206/Summary-of -FIRRmA.pdf. 9. ThismovebythegovernmentwaswidelybelievedtobearesponsetofearsthatchineseinvestorscouldbebargainhuntinginIndia’scorporatesector.India’sministryofcommerceadmittedinitspressreleaseofApril18,2020,toadesiretoquashattemptsatopportunistictakeovers of Indian assets in the strained economic environment with the onset of the pandemic. 10. The Santiago Principles, however, are not part of the Financial Stability Board’s compendium of Standards (for a detailed discussion on the types of global standards and context for the Santiago Principles, see De Belis [2011]; see also norton [2010]). 11. The successor to the International Working group of SWFs, the International Forum of

Sovereign Wealth Funds currently represents more than 30 sovereign wealth funds (https://www.ifswf.org/about-us). 12. The first scoreboard assessed 33 funds in 28 countries. 13. In 2015, the SWFs assessed scored best on elements of basic structure such as stating the objective of the fund and providing a legal framework, and scored least well on behavior elements such as policy on leverage or portfolio adjustment. 14. The index is a project of the Sovereign Wealth Fund Institute. Within this 10-point index, the nigeria Sovereign Investment Authority has scored 9 points, and the Ireland

Strategic Investment Fund and Khazanah nasional have each scored 8 points. See the

Linaburg-maduell Transparency Index, Sovereign Wealth Fund Institute (accessed September 18, 2020), https://www.swfinstitute.org/research/linaburg -maduell-transparency-index. 15. For example, “Truman (2010, 94–96) is critical of the Linaburg-maduell index for being superficial in some of its 10 elements (such as, Does the fund have a website?), not releasing the resulting scores for each element, and for combining many factors into some elements, such as portfolio value, returns, and management compensation, without providing any information about how the factors were weighted within each element” (Bagnall and

Truman 2013, 14).