Sooner or later redistribution profiteers will meddle with any wealthy sovereign wealth fund.

Sir, with respect to “the world’s largest sovereign wealth fund” Norway’s, Richard Milne writes: “The danger is that one of the few sovereign wealth funds based in a democracy could be weakened by political meddling.” “Wealth fund’s abode at risk of becoming Norway political saga” May 9.

I quote from my book “Voice and Noise” from 2006. “My name was put forward as a candidate for the post of Diversification Manager in the Venezuela Investment Fund that was being created in 1974 to handle the oil income surpluses of the nation. I entered the Fund its very first day, and I left a couple of weeks later the same day my desk arrived, utterly frustrated when the Fund was requested [by the politicians in government] to analyze, and obviously endorse, [in one week] the economic feasibility studies of a 4 billion dollar investment known as the Fourth Plan of SIDOR, the big Venezuelan iron and steel complex. With an “if something goes wrong with this project the Venezuelans might have the right to hang us in Plaza Bolívar, and I’m much too young for that” I slammed the door on the public sector …”

Sir, sometimes politicians (redistribution profiteers) will meddle with a sovereign wealth fund after just two weeks, sometimes it will take decades for that, but sooner or later that will always happen, you can bet on that.

@PerKurowski

Even the best sovereign wealth fund, like Norway’s, will in the long run degenerate. Sorry, but that’s life.

Richard Milne comments that the Norwegian sovereign wealth fund, “has become a more active investor, trying to use its growing heft to influence company behaviour “Norway sovereign wealth fund flexes shareholder muscles” March 8.

Sir, I tell you, there will come day, you can bet on it, when a majority of Norwegians will opine “we would have been much better off managing each one of us his share of the net oil revenues, than handing these over to a sovereign wealth fund”. And they will be right.

How do I know? Well that’s how it goes when too few decide on so much wealth… it goes to their heads, and they start doing things for which they have never really been authorized, and then something happens, and then there is nothing to be done about it.

Do I mean that it was wrong of Norway to set up this fund? Not at all, I even wish Venezuela had done that… which it did… but

In 1974, as a recent young MBA, I became the diversification manager of the first Venezuelan Investment Fund set up to manage the nations fast growing oil revenues. It took me only two weeks to understand that it would not work, and so I resigned.

Norway was much further advanced than Venezuela when, in 1990, it set up its fund, and it has clearly done a lot better. Well-done Norway!

Nonetheless, the degenerative forces imbedded in such a fund are just too powerful, even for Scandinavians. The introduction of new objectives, without a clear explanation of what that could entail in reduced returns, is just one example of such forces.

Why do I make this point? Because in my Venezuela, again I hear the voices of those interested in its management, clamoring for something like the Norwegian Sovereign Wealth Fund. And Sir, I trust a thousand times more the citizens to know what to do with their share, than some few experts with everyone’s share.

@PerKurowski