Chile, UAE, Singapore, Azerbaijan, Ireland and Norway claim top rankings on the latest transparency index, published by SWF Institute. At the bottom of the ranking is Venezuela, Oman, Nigeria, Mauritania, Kiribati, Iran, Brunei and Algeria.
The Linaburg-Maduell index is calculated with 10 principles -- such as whether the fund provides up-to-date, independently audited annual reports, or whether it provides clear strategies and objectives. It also gives points on whether the fund gives ownership percentage of company hodlings, total market value, returns and management compensation.
Enhancing transparency is a key task for sovereign wealth funds, whose often opaque operations have come under heavy criticism by some Western politicians who suspect them of investing with political, rather than commercial, motives.
In fact in the recent meeting of the world's leading sovereign wealth funds, only Norway, Chile, New Zealand agreed in advance to speak to Reuters on the sidelines; when contacted on the ground China also spoke. Others either declined to comment at all or did not return email.
Australia's Future Fund reveals that the fund's mixed asset portfolio (excluding Telstra holding) returned 5.6 percent in the third quarter.
The fund has just over 10 percent in Australian equities, 22.8 percent in global equities. Safer instruments dominate, with debt holdings at 24 percent and cash at 31 percent.
The mixed-asset fund significantly underperforms an equity-only portfolio. For example, the MSCI world equity index has risen more than 17 percent in the Q3 alone.
The Future Fund is a rare SWF which reports results quarterly, like a public-listed firm. The underperformance might outrage the public though -- so is this worth it?
Recall remarks last month by David Murray, the fund's chairman of the board of guardians , which highlighted some downsides in reporting quarter after quarter.
"We are happy to report but it does create some significant difficulties. If forces the community to take very short term views in returns in the fund and causes management of the fund to be concerned about media and community responses," he said at a SWF meeting in Azerbaijan earlier this month.
Jin Liqun, chairman of the board of supervisors at China Investment Corp, was more direct.
"SWFs are not publicly traded companies. We do not have obligations to publish quarterly information to the public. Indeed, this kind of quarterly disclose has done more harm than good. It has encouraged managers to do reckless things," Jin told Reuters in Baku.
Sovereign wealth funds, facing criticism from Western regulators and politicians for their opaqueness, are keen to open up their books.
While Norway is a leader in the SWF league of transparency, other countries like China have started publishing annual reports.
But is transparency all good for SWFs?
Gary Smith, head of central banks, supranational institutions and sovereign wealth funds at BNP Paribas Investment Partners, says the pressure to open up has raised unseen consequences of having to face domestic pressures.
In his analysis, the relationship between the level of assets under management and the level of public comfort is assymetric. As shown in this chart, when their AUM rise, the public is happy. However, if AUM fall at all, they become extremely unhappy.
His recent trip to Singapore has confirmed this. A taxidriver complained to him about the poor performance of the country's SWF, GIC.
"I'm quite sure it's the first time in 29 years that taxi drivers in Singapore have been talking about the performance of the GIC," he says.
John Nugee, head of official institutions group at State Street Global Advisors, says pressure from domestic audiences could change SWFs investment horizon.
"The level and tone of some of the criticism by national media for high profile losses might even jeopardize their ability to take the long-term investment positions that have given them such a comparative advantage," he says.
Glitzy Dubai's property market is in trouble, there's no doubt about that. Just take a look at the hundreds of motionless cranes, unfinished projects and the expats who are leaving in droves as they lose their jobs.
And prices and rents which soared during a six-year boom have crashed since late last year. According to one resident who recently moved in the City, it now costs 150,000 dirhams to rent a three-bedroom flat on the Palm, a man-made island off the coast of the emirate, around the same it would have cost to rent a one-bedroom appartment there a year ago.
It's not just the global downturn thats the concern for Dubai's once-booming property market, but also the lack of transparency and need for greater regulation. And that's what's going to keep the western investor from splashing the cash.
Investors looking at Dubai's real estate sector are a different breed. They are no longer looking to snap up properties in the hope of making a quick buck. They are more conservative with a longer term outlook.
"RERA (the Real Estate Regulatory Authority) has been trying to introduce regulation to minimise the impact of speculative investors," said Andrew White, head of Middle East operations at UK-based investor Kenmore property Group.
"But some have said this is like shutting the stable door after the horse has bolted because the downturn has more or less wiped these out anyway." So, a little too late perhaps ? And what about the recently announced planned merger of Emaar Properties, builder of the world's tallest tower, with
three other local property firms?
Well, so far no one really knows. Simply put, there has been little in the way of information about this.
"If you look at Emaar and the potential merger, there is little financial clarity on how this will proceed and that is going to worry investors," said Bobby Sarkar, analyst at Al Mal Capital. "The U.S. and European markets have high levels of clarity in terms of regulation, but that isn't the case here."
There is no doubt however that the government is trying to improve regulation and transparency. Several wins for the property market over the last year include the introduction of a monthly rental index and new laws for property maintenance, not to forget the continuing effort to crack down on corruption.
But there is a long way to go and more is needed for Dubai to come close to rivalling mature markets such as the UK and U.S. which offer the longer-term investor the transparency they crave.
I once paid a cop 30 ringgit (about $10 then) for making an apparently illegal left-hand turn in Kuala Lumpur. Scores of drivers in front of me were also handing over their "instant fines", discreetly enclosed within the policeman's ticketing folder. It was days ahead of a major holiday and the cops were collecting their holiday bonus from the public.
Malaysia opposition leader Anwar Ibrahim holds a disc he says contains evidence of judge-fixing in Malaysia
I felt bad about this, of course. What I was doing was illegal, immoral and perpetuating an insidious culture that goes by many names in the East -- "baksheesh" in India, "Ali Baba" (and his 40 thieves) in Malaysia, "swap" in Indonesia (means "to feed"). But the policeman pointed out I would have to take off the good part of a day to go to court and pay 10 times as much to the judge. So I rationalised: "When in Rome..."
Alas it was not the first time, nor would it be the last that I have (ahem) paid an "informal levy" to officialdom. I've given baksheesh to the phone company in India to get a telephone installed, and to get a driver's license without a test (no wonder there are so many accidents in India.) I've paid the immigration officer at Jakarta airport to let me in with a nearly expired passport.
Many of my friends in Asia have similar tales to tell about bribing customs agents, power companies, hospitals, schools -- anybody with the power to give a license or provide a service. A couple of bucks here, a couple there. Pretty soon you're talking about real money. Daniel Kaufmann, who spearheaded the World Bank's efforts to improve the study of governance and the rule of law estimates that $1 trillion of bribes are paid every year. A Reuters series on corruption in Asia found that perceptions of corruption in the emerging markets of Asia have not improved much over the years and have even declined in some cases. This is despite a growing revulsion among people in those countries for business as usual on the "demand" or government side, and a growing realisation from companies on the "supply side" of the bribery equation that payola is simply bad for business.
Protester holds a wanted poster for ousted Thai premier Thaksin Shinawatra at a mass anti-government rally in Bangkok.
Part of the problem is mindset and a major attitude adjustment might be needed. People may be fed up with "money politics" and crony capitalism in their countries, but they still pay off people in their neighbourhoods. A U.S. National Bureau of Economic Research study on unpaid parking fines issued to diplomats in New York, home to the U.N., showed Southeast Asian nations again among the league leaders and a remarkable correlation with more conventional measures of corruption. You can take the man out of his corrupt country, but you can't take the culture of corruption out of the man.
Anti-graft fighters model uniforms that those convicted of corruption offenses inIndonesia willbe required to wear in court and jail.
For years, Indonesia ranked among the most corrupt countries in the world. It permeates almost every level of society, reducing the country's appeal to foreign investors, and curbing Indonesia's potential for growth. Today, Indonesia's anti-corruption agency, known by its acronym KPK, has won plenty of media attention with its Jame Bond-like undercover exploits against corrupt officials. The government is also trying to get at the root of the problem by sending officials and judges to "anti-corruption school.
Passers-by in Jakarta walk past a poster that reads "fight corruption."
Some OECD countries will even let you take a tax deduction for providing "facilitation payments" to get routine services such as a phone installed. Facilitation payment? Hello, it's called a bribe, payola, grease, ice, a backhander. It's corruption, the dictionary definitions of which include moral perversion, depravity, debasement, not to mention rottenness. Okay, that's a little harsh. We're not talking about the moral equivalent of, say, paedophilia. But it's surely a slippery slope from giving the cop some lunch money, to bribing the customs guy to look the other way on a smuggled shipment, to paying off politicians.
Ramon Navaratnam, 73, the Transparency International Malaysia President told me the battle for him started when he was a young man in the finance ministry and he came home one night from work to find a case of whisky on his doorstep from a company bidding on a government contract. "It took a lot of doing, but the company finally took the whisky away. "If I had taken that box of whisky, I can never say no later on."
