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Hedge fund manager drops control of fortune for $1 trillion job

Mikael Holter
Bloomberg

Nicolai Tangen has almost crossed the finish line to become one of the most powerful people in global finance.

The 53-year-old London-based hedge fund manager signed a contract that requires some sacrifices on his part in exchange for the title of chief executive of Norway’s $1 trillion wealth fund, the world’s biggest.

The entity that hired him and that manages the fund, Norges Bank, presented a set of terms it hopes will appease critics and allow Tangen to start as CEO on Sept. 1. The Supervisory Council of Norges Bank, its watchdog, is due to respond on June 11.

As part of his contract, Tangen has agreed to forfeit control of his personal fortune, which is estimated at over $860 million. His pay as CEO – roughly $670,000 a year – will cover just a fraction of the wealth tax he faces in Norway.

Tangen, whose contract is designed to persuade the world that his appointment won’t carry with it any conflicts of interest, says he “will only have one hat,” when he becomes CEO. “And that’s the oil fund hat.”

Tangen’s appointment has been mired in controversy since it was announced in March. He wasn’t on an official list of candidates, and Norges Bank’s watchdog has since criticized the hiring process for failing to address potential conflicts of interest tied to his personal wealth and current job. The fund Tangen founded, AKO Capital LLP, uses tax havens.

Local media have also devoted considerable attention to documenting Tangen’s seemingly ostentatious life. A Norwegian tabloid published details of a lavish event he hosted last year. Several top Norwegian officials attended, including the outgoing CEO of the wealth fund, which raised more questions about his recruitment.

Tangen says he doesn’t think the process has been unfair. Public attention has been “focused on a lot of important things,” he said in an interview in Oslo. “I’m sorry that it’s had an impact on the oil fund and Norges Bank’s reputation.

Norges Bank Governor Oystein Olsen said he expects the wording in the contract to put the watchdog’s concerns to rest.

The process has been “difficult,” but Olsen said he’s “quite convinced that we’ve done the right thing, we have found the right person.” Now, he expects the “storm will sort of fade off,” he said.

Despite the controversy, Tangen’s credentials as an investor capable of leading Norway’s vast wealth fund are largely undisputed. Knut Kjaer, the founding CEO of the fund, has described Tangen as a “global talent from the world of finance,” and says Norway is lucky to have him.

Tangen’s contract states that his voting rights in AKO will be cut to 43%, and his holdings will be handled by Norwegian asset manager Gabler Investments AS via a trustee. A trustee will also be appointed to manage his voting rights.

Tangen said he has “no plans” to return to AKO after running the wealth fund. He also said it was never an option to exit his stake completely, for example by moving his personal investments to Norwegian assets, which the wealth fund can’t hold.

The Supervisory Council, which is designated by parliament to control Norges Bank, doesn’t have the power to block Tangen’s appointment. But its comments will be closely watched, and straying too far from its recommendations could lead lawmakers and the government to get involved.

For now, there are signs parliament may throw its support behind Tangen. A member of the Progress Party said on Thursday its backing was likely, which would give the government the majority needed to get Tangen past the finish line.