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(Alliance News) - Norway's central bank is to sell its entire stake in G4S PLC after alleging the company could potentially be committing "serious" human rights violations in the Middle East.
Norges Bank, which runs Norwegian sovereign wealth fund Government Pension Fund of Norway, said Thursday there is an "unacceptable risk" that G4S contributes to, or is responsible for, serious and systematic human rights violations.
"The executive board's decision on exclusion were made based on a recommendation from the Council on Ethics. The recommendation is reasoned with unacceptable risk the company contributes to or is responsible for serious or systematic human rights violations," said Norges Bank.
"The Council's investigations show workers have paid recruitment fees to work for the company, and that workers have taken out loans in their home country to be able to pay the fees," Norges Bank continued.
"When the workers arrive in the Gulf, they must spend a significant part of their salary to pay off this debt, and therefore have little chance of leaving. Many also received far lower wages than agreed, and in the Emirates, the workers got their passport confiscated."
"The Council's investigations also revealed long working days, a lack of overtime payment, and examples of harassment," it concluded.
In response, G4S noted that Norges Bank's decision was taken in April, and since then, Norges Bank has reduced its stake to just 0.3%, making it the 45th largest shareholder. It did not say what its stake was prior to April.
G4S added: "We welcomed the engagement with the Council on Ethics over the past three years, and we wholeheartedly agree migrant workers need care and support and deserve to be treated with dignity and respect at all times. We are committed to ensuring they feel confident they can raise any concerns they have about any aspect of their employment with G4S.
"We carried out a robust investigation into the issues raised by the Council on Ethics into G4S's employment practices in Qatar and the UAE. We are making good progress on our action plan to reinforce our high standards in relation to employee recruitment and welfare provisions in the Middle East."
G4S continued: "We have appointed a full-time migrant worker coordinator whose primary role is to conduct research into recruitment agencies, their practices and fees in each of the countries of origin, ensuring strict compliance with our code and that our policies and standards of employment are upheld."
Norges Bank excludes a wide range of companies from its investments for a variety of reasons, including the production of coal, serious environmental damage, human rights violations, and the production of tobacco or nuclear weapons.
Some of these include aircraft maker Boeing Co, miner Barrick Gold Corp, defence contractor BAE Systems PLC, power plant operator Drax Group PLC, tobacco firm Imperial Brands PLC, G4S outsourcing peer Serco Group PLC, and French engine maker Safran SA.
In March, G4S reported a 63% decline in annual pretax profit after having to make a GBP100 million payment after a class-action lawsuit by employees in California.
The legal case involved claims made against a subsidiary over meal and rest breaks under California employment law.
G4S shares were 2.1% lower on Thursday afternoon at a price of 204.10 pence each.
By George Collard; georgecollard@alliancenews.com
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