Sovereign wealth funds and the US: so far, so good

The US has no fear about sovereign wealth funds investing in its companies, a senior official told delegates at Davos this morning.

Robert Kimmitt, the US Deputy Treasury Secretary, said that so far the funds had played a positive role without generating political controversy.

Sovereign wealth funds have invested billions in US banks hit by losses in the sub-prime mortgage market. But some observers fear that Governments behind the funds could try to use their investments for political gain.

"At this point, the history with sovereign wealth funds is they are generating higher investment returns without generating political controversy," Mr Kimmitt told a panel discussion.

"Importantly, both fund management and investment decisions we have seen have been made on commercial, not political grounds. We welcome that kind of investment in the United States. We don’t fear such investment."

In 2006, the US Government blocked a company from Dubai making an investment that would have given it control of some US ports but since then, Mr Kimmitt said, over 200 cases had been cleared by the US Committee on Foreign Investments.

By Peter Stiff