Description
This paper analyses the development of a transnational accountability regime, – the
Generally Accepted Principles and Practices (GAPP), introduced in 2008 for sovereign wealth
funds. Facilitated by the International Monetary Fund, the regime aimed to improve the
transparency, governance and accountability of these government-owned investment funds
that originate primarily from the Middle East and Asia. I focus here on the struggles leading
to the establishment of the boundaries of the GAPP accountability regime by diagnosing the
accountability problem, determining the providers and the imagined users of the accounts
and defining the appropriate course of action. I then analyse the struggles involved in negotiating
the process and technologies used to establish the accountability relationship including
the role of standards in accounting, audit and risk management, as well as transparency
and compliance pressures. In each case I identify the different ideas or templates that
emerged during the negotiations and how consensus was achieved through careful steering
by a core coalition comprising the US Treasury and the largest, most legitimate funds. I highlight
the need to go beyond typical fault lines in debates surrounding the origins of global
governance regimes (e.g. local vs. global, western vs. non-western, core vs. peripheral) by
focusing on emerging coalitions of local/global and western/non-western actors that
increasingly drive such regimes.
Instituting a transnational accountability regime: The case
of Sovereign Wealth Funds and ‘‘GAPP’’
q
Afshin Mehrpouya
Accounting and Management Control Department, HEC Paris, 1 rue de la Libération, 78351 Jouy en Josas, France
a r t i c l e i n f o
Article history:
Available online 10 June 2015
a b s t r a c t
This paper analyses the development of a transnational accountability regime, – the
Generally Accepted Principles and Practices (GAPP), introduced in 2008 for sovereign wealth
funds. Facilitated by the International Monetary Fund, the regime aimed to improve the
transparency, governance and accountability of these government-owned investment funds
that originate primarily from the Middle East and Asia. I focus here on the struggles leading
to the establishment of the boundaries of the GAPP accountability regime by diagnosing the
accountability problem, determining the providers and the imagined users of the accounts
and de?ning the appropriate course of action. I then analyse the struggles involved in nego-
tiating the process and technologies used to establish the accountability relationship includ-
ing the role of standards in accounting, audit and risk management, as well as transparency
and compliance pressures. In each case I identify the different ideas or templates that
emerged during the negotiations and howconsensus was achieved through careful steering
by a core coalition comprising the US Treasury and the largest, most legitimate funds. I high-
light the need to go beyond typical fault lines in debates surrounding the origins of global
governance regimes (e.g. local vs. global, western vs. non-western, core vs. peripheral) by
focusing on emerging coalitions of local/global and western/non-western actors that
increasingly drive such regimes. I showhowthe disproportionate representation of ?nancial
actors in such coalitions leads to less attention to questions of public accountability, and
instead focusing such regimes on ?nancial accountability. I further elaborate on the impli-
cations of the fall-back to transparency in transnational accountability regimes as a last
resort and the types of resistance emerging against it.
Ó 2015 Elsevier Ltd. All rights reserved.
Introduction
Sovereign Wealth Funds (SWFs) are principally Middle
Eastern or Asian state-owned funds that invest in
international capital markets. Further to recent oil price
hikes and widening trade imbalances between Asian
economies and the US, SWFs have rapidly grown to
become in?uential actors in global capital markets. With
an estimated cumulative size of 5.6 trillion USD, they
now surpass the combined ?nancial value of hedge funds
and private equity (TheCityUK, 2013). Repeatedly involved
in large-scale, visible transactions in the US and Europe
since the 2007–2008 Global Financial Crisis, they have
been frequently criticised by western governments and
media for their lack of transparency and the potential
political motives behind their investment decisions
(Cohen, 2009; Truman, 2008). In response to suchhttp://dx.doi.org/10.1016/j.aos.2015.05.001
0361-3682/Ó 2015 Elsevier Ltd. All rights reserved.
q
I would like to thank the editor, David Cooper and two anonymous
reviewers for their rich and constructive comments and suggestions. I
further thank Diane-Laure Arjalies, Sebastian Becker, Imran Chowdhury,
Marie-Laure Djelic, Isabelle Huault, Philippe Lorino, Daniel Martinez,
Andrea Mennicken, Nicolas Mottis, Mike Power, Sigrid Quack, Rita
Samiolo, Keith Robson, Prem Sikka, and participants in presentations of
different versions of this paper at various conferences and seminars for
their generous comments. All remaining errors and weaknesses are mine.
E-mail address: [email protected]
Accounting, Organizations and Society 44 (2015) 15–36
Contents lists available at ScienceDirect
Accounting, Organizations and Society
j our nal homepage: www. el sevi er. com/ l ocat e/ aos
concerns, the International Monetary Fund (IMF) facili-
tated four months of formal negotiations leading to the
release of a voluntary code, the Generally Accepted
Principles and Practices (GAPP),
1
in October 2008. The pre-
sent study focuses on the process that led to the enactment
of this particular transnational governance regime which
aimed to improve the accountability, governance and trans-
parency of SWFs.
The case of GAPP is part of the broader restructuring of
transnational governance that has occurred over the past
20 years away from the states and towards a fast expand-
ing constellation of competing and complementing
transnational governance actors, processes and technolo-
gies (Braithwaite, 2008; Djelic & Sahlin-Andersson, 2006;
Levi-Faur, 2005). In the absence of coercive apparatuses
of nation states in the transnational space, rituals of
account giving and veri?cation have been central to this
transformation (Power, 1999). Transparency and account-
ability have been two crucial catchwords and structuring
norms underlying this explosion of new transnational gov-
ernance modalities (Garsten & Bostrom, 2008; Garsten &
De Montoya, 2008).
Negotiations leading to the enactment of a transna-
tional governance regime are fraught with tensions sur-
rounding the de?nition of the accountability problem, the
targets of the regime to be ‘‘held to account’’, the imagined
users of the accounts and the accountability actions to be
taken to address the problem (Garsten & Bostrom, 2008;
Grant & Keohane, 2005; Roberts & Scapens, 1985; Young,
1994). Such power-laden regimes of ‘‘hierarchical account-
ability’’ (Roberts, 1991) place different levels of emphasis
on the formulation of best practice norms, such as stan-
dards and soft laws as bases for judgment; transparency/-
surveillance pressures aimed at production of accounts of
the targets; and compliance pressures based on a combina-
tion of normative, mimetic and coercive mechanisms to
intervene in their targets (Garsten & Bostrom, 2008;
Roberts, 2009).
In the ?nancial sector, following the Asian Crisis and the
Global Financial Crisis, such ‘‘standards, surveillance and
compliance’’ regimes (Wade, 2007), have been fast institu-
tionalizing and expanding around the world through active
push by the IMF, the World Bank and the Financial Stability
Forum/Board (Arnold, 2012; Humphrey, Loft, & Woods,
2009). Accounting as the key technology of visibility
and audit as a crucial ritual of veri?cation lie at the
centre of this ‘‘transnational re-regulation’’ (Djelic &
Sahlin-Andersson, 2006, p. 12) of global ?nancial markets
(Arnold, 2009b, 2012). However, too little is known about
the political processes and institutional contexts in which
such regimes are enacted (Arnold, 2009b; Hopwood,
2009, p. 892). This knowledge is essential if we are to
achieve a better understanding of the rapidly-changing
political economy of accounting and accountability
(Arnold, 2012; Cooper & Sherer, 1984).
Drawing on a wide range of sources including inter-
views, diplomatic cables, participant observation,
publicly-available reports and secondary literature, I aim
to address this gap by unbundling the processes leading
to the institution of the GAPP accountability regime. I anal-
yse the competing perspectives of different actors on each
dimension of the GAPP, and the process through which
those immanent ideas were marginalized and how one
particular template emphasising the freedom of capital
?ows and transparency came to de?ne the ?nal code.
This study aims to make three contributions to the
scholarship on the political economy of accounting and
accountability. Firstly, despite the fast-expanding scholar-
ship about the role of transparency, account giving and
audit in global governance regimes (Arnold, 2012; Arnold
& Sikka, 2001; Garsten & Bostrom, 2008; Humphrey
et al., 2009; Neu, Ocampo Gomez, Graham, & Heincke,
2006; Neu, Rahaman, Everett, & Akindayomi, 2010;
Wade, 2007, 2010), very few studies have unbundled the
‘‘global’’ and laid out the detailed contentious processes
through which such regimes are institutionalized
(Halliday & Carruthers, 2009). In this study I draw upon
the accountability literature (Butler, 2005; Garsten &
Bostrom, 2008; Hoskin, 1996; McKernan & McPhail,
2012; Messner, 2009; Roberts, 1991; Roberts, 2009;
Roberts & Scapens, 1985; Woolgar & Neyland, 2013) to
analyse the processes leading to the institution of the
GAPP. This study shows the importance of unbundling
such processes and exploring the agencies, discourses
and institutional settings that lead to the emergence of a
dominant template at the expense of all other immanent
ideas of accountability. Attention to how alternative
immanent ideas of accountability are marginalised is cru-
cial to understanding how contemporary global gover-
nance regimes are constituted and maintained. Such
understanding contributes to on-going re?ections on
transnational ‘‘accounterability’’ (Kamuf, 2007; McKernan
& McPhail, 2012), i.e., alternatives to dominant calculative,
?nancialised and hierarchical transnational accountability
regimes.
This paper also contributes towards understanding the
political economy of transparency, a notion that has
emerged as a powerful norm in global governance, provid-
ing the normative foundations for the diffusion of ?nancial
accounting and audit (Arnold, 2009a, 2009b; Arnold, 2012;
Humphrey et al., 2009). In doing this it responds to recent
calls by accounting scholars to study ‘‘the ideological roots
of the notion of ‘‘transparency’’ and the role it is expected
to play in governing today’s extraordinarily complex and
volatile ?nancial system.’’ (Arnold, 2009a, p. 807). In this
respect, it provides a comprehensive analysis of the condi-
tions that led to transparency moving to the fore in this
transnational accountability regime, as a panacea and a
last resort. It then explores the different types of challenges
that transparency pressures faced from different account-
ability targets depending on their national information
practices and institutional context. This helps address an
important lacuna in current knowledge about the experi-
ence and perspectives of the receiving side of the global
accountability regimes (Halliday & Carruthers, 2009; Neu
et al., 2010) that face powerful world society norms such
as transparency. Studying the experience and perspectives
of the receiving side regarding transparency is especially
important at this time, given the greater power and
1
The GAPP can be found athttp://www.iwg-swf.org/pubs/gapplist.htm
16 A. Mehrpouya / Accounting, Organizations and Society 44 (2015) 15–36
capability of several historically-weak non-western coun-
tries (as this case shows) and their increased voice in glo-
bal governance arenas.
The third contribution of this paper is to the debates
surrounding the agentic and structural drivers behind the
emergence of new transnational governance regimes both
in accounting (Arnold, 2012; Arnold & Sikka, 2001; Neu
et al., 2006; Power, 2009) and elsewhere in political
sciences and sociology of law (see Halliday & Osinsky,
2006 for a summary). There have been recent calls to go
beyond the entrenched globalist, sceptic, postcolonial,
world society and world systems views of transnational
governance regimes and to instead deconstruct the ‘‘glo-
bal’’ by paying attention to the processes through which
standards, codes and soft laws are enacted and consensus
is achieved (Halliday & Carruthers, 2009; Halliday &
Osinsky, 2006). This study shows that there is an analytical
need to move beyond traditional core vs. periphery and
globalisation vs. state frontiers by focusing instead on the
communities and ‘‘coalitions of the unlikely’’ (Djelic,
2013) transcending these fault lines that come together
around shared interests and ideologies and drive the insti-
tution of contemporary global governance regimes.
Finally, this study brings to the fore in the accounting
literature a mostly underexplored category of transna-
tional actors that is the Sovereign Wealth Funds, with sig-
ni?cant power in the global ?nancial markets and with
unique attributes such as being state/market hybrids orig-
inating mostly from non-Western countries.
In the following section, I introduce the literatures on
global governance and accountability as relevant to the
study of this empirical case. Next, I describe the data
sources used for the study. I then provide an introduction
to the recent history of SWFs and the GAPP process, fol-
lowed by a detailed analysis of the struggles involved in
enacting the accountability regime. In the ?nal section, I
elaborate on the implications of this study for the litera-
ture on the political economy of accountability and global
governance.
Globalisation and transnational accountability
Accountability involves the discourse and practices of
demanding the production of an account of self (Butler,
2005; Roberts, 1991), which constitutes a cornerstone of
the liberal forms of governing. It refers to ‘‘the ways in
which actions are organized: that is, put together as pub-
licly observable, reportable occurrences’’ (Button &
Sharrock, 1998, p. 74). The fast expansion of the global ‘‘ac-
countability movement’’ (Meyer, 2008, p. 250) and govern-
ing through rituals of norm-setting, account giving and
veri?cation has led to the emergence of ‘‘an accountability
industry of standards setters, regulatory agencies and
inspection regimes’’ (Garsten & Bostrom, 2008, p. 1). This
has resulted in a new organising and governing paradigm
– the ‘‘audit society’’ (Power, 1999).
In this paper, an accountability regime refers to a con-
stellation of actors, technologies, discourses and processes
organised with the goal of in?uencing the accountability
targets’ ways of being and doing through rituals of account
production and visibility (Meyer, 2008; Roberts, 1991;
Roberts & Scapens, 1985).
2
Instituting an accountability
regime depends on contested and power-laden processes
to establish its boundaries. These boundaries include the
accountability problem and action, and the users and provi-
ders of accounts (Garsten & Bostrom, 2008; Woolgar &
Neyland, 2013). The ‘‘appropriate’’ accountability problem
(Young, 1994) is de?ned through ‘‘diagnostic struggles’’
(Halliday & Carruthers, 2009, p.17) or the process of prob-
lematisation (Messner, 2009). In this process, the idea of
inef?cient, opaque, unreliable or corrupt categories of indi-
viduals or organisations has to be established as the basis
for the need to hold them to account. The accountability
problem and the ‘‘appropriate action’’ or ‘‘prognostic strug-
gles’’ (Halliday & Carruthers, 2009) to address the con-
structed problem co-constitute each other (Young, 1994).
Typical fault lines for action in transnational governance
are transnational/national, soft/hard, multilateral/bilateral
or self-governance regimes for accountability targets
(Halliday & Carruthers, 2009). In the process of setting a
regime’s boundaries – besides settling the appropriate prob-
lem and the action – key questions of who is to be made
accountable and who the users/bene?ciaries of the accounts
are, need to be addressed (Grant & Keohane, 2005; Young,
2006). The targets of an accountability regime have to be
‘‘recognized on the other’s terms’’ (Roberts, 2009, p. 959),
categorised and territorialised before they can be targeted
for intervention (Miller & Power, 2013). Such categories
and classi?cations are frequently contested, mobile, porous
and ‘‘morally and legally consequential’’ (Woolgar &
Neyland, 2013, p.75). As for the bene?ciaries and users of
the accounts, different actors push for different de?nitions
for the imagined users of an accountability regime depend-
ing on their normative preferences, interests and preferred
course of accountability action. These imagined users fre-
quently have limited or no voice in the process (Young,
2006).
Within and mutually constituting the boundaries of the
accountability regime, struggles around the ‘‘how’’ of the
regime take place, i.e., determining the technologies and
processes to be used to establish the ‘‘accountability rela-
tionship’’ between the imagined users of the accounts
and the targets of the regime. A key contested question
in this area is what standards of ‘‘ideal self’’ should be used
as the basis to judge targets (Hoskin, 1996). In certain
regimes (e.g. the Financial Stability Forum following the
2
Scholars in accounting and accountability have used several concepts
such as ‘‘ensemble’’ (Miller, 1998), ‘‘constellation’’ (Burchell, Clubb, &
Hopwood, 1985), ‘‘system’’ (Roberts & Scapens, 1985), ‘‘assemblage’’
(Miller, 1998) and ‘‘complex’’ (Miller & Power, 2013) to refer to the
collective role of the actors, discourses, technologies and processes that
make account-based governance possible. In this paper, drawing upon
Meyer (2008), I use the term ‘‘transnational accountability regime’’. This is
because other concepts such as constellation and assemblage frequently
have a broader longitudinal and spatial (or at times vaguely-de?ned) scale
and scope. The GAPP regime, while part of the broader transnational
governance constellation/assemblage, refers to a speci?c case within
speci?c temporal and spatial con?nes. In addition, the concept of regime
(Uddin & Hopper, 2001) and ‘‘regimes of control’’ (Burawoy, 1983) as
mobilised in accounting literature and elsewhere has a stronger agentic
dimension, closer to the GAPP case where a coalition of actors and their
collective agency are crucial to its process and outcome.
A. Mehrpouya / Accounting, Organizations and Society 44 (2015) 15–36 17
Asian Crisis), the standards as bases for judgment are
clearly de?ned and demanded (Arnold, 2012). In some
other regimes only transparency
3
and account production
are demanded, assuming that the dominant discourses in
the ?eld which establish ideas of superior and inferior ways
of being and doing will transform the accounts and mea-
sures of targets into bases for judgment (Hoskin, 1996;
Roberts, 2009).
4
As for the process of intervening in targets
to shape them in the image of the ideal self, contemporary
regimes of ‘‘hierarchical accountability’’ (Roberts, 1991)
increasingly rely on transparency as a governance panacea
in pushing for the production of publicly available accounts
of targets (Arnold, 2009a, 2009b; Roberts, 2009). Such
accounts are then integrated in accountability technologies
such as public reports, rankings, certi?cations, signatory lists
and league tables that help establish the targets as superior
or inferior when compared to each other and/or to the stan-
dards of the ideal self. Such technologies of normative order-
ing and moralisation of accounts (Fourcade & Healy, 2007)
are founded on notions of recognition, shame or guilt
(Roberts, 2009) and aim at the subjectivisation of the
accountability regime’s ideals by its targets, leading to
self-governing (Roberts, 2009). Accounts can also be
employed as a basis for more coercive forms of intervention
in the targets – such as IMF and World Bank’s ‘‘structural
adjustment programmes’’ in emerging economies, backed
by the coercive power of their conditional loans (Neu
et al., 2010). These contested dimensions of an accountabil-
ity regime are summarised in the ?rst two columns of
Table 2 in the discussion section.
When enacting transnational accountability regimes,
settling each of the above dimensions involves struggles
between concerned actors with a stake in the process,
who frequently include the targets of the regime, interna-
tional organisations, states, investors, professional bodies
and accounting and audit ?rms (Halliday & Carruthers,
2009). The fragile and contested nature of the political
arrangements leading to the institution of accountability
regimes lead to a state where all aspects of accountability
are constantly formulated and reformulated and where
actors continue their in?nite run on the ‘‘treadmill of
accountability’’ (Garsten & Bostrom, 2008, p. 242).
In the ?nancial sector, the Asian Crisis and the Global
Financial Crisis played signi?cant roles in driving the
emergence of hierarchical transnational accountability
regimes with standards and transparency pressures at
the core. The Asian Crisis led to a shift in the policies of
the IMF and the World Bank from the idea of ‘‘liberalised
markets’’ towards the ideal of ‘‘standardised markets’’.
This was based on the rapid expansion of international
accounting, audit, risk management and governance stan-
dards, with transparency as the key driver for
market-driven compliance (Arnold, 2012; Wade, 2010, p.
158). The IMF and the World Bank sought to address the
established diagnosis of ‘‘crony capitalism’’ in affected
Asian countries by introducing a set of transparency pres-
sures based on international ?nancial and audit standards
for ?rms, ?scal transparency for states and standardised
statistics for economies (Arnold, 2012). The IMF and the
World Bank began to publicly disclose annual country
Reports on the Observance of Standards and Codes
(ROSC) for emerging economies, with the objective of
achieving compliance through the disciplining force of
?nancial markets. The IMF’s Managing Director,
Camdessus (1999), talked about transparency as the
‘‘golden rule’’, describing it as ‘‘absolutely central to the
task of civilising globalisation’’.
The global ?nancial crisis has further reinforced this
model. The appearance of emerging economies such as
China, India, Brazil and South Africa, along with the G20
as a key platform for global agenda setting, has resulted
in a situation where the standards, surveillance and com-
pliance regime is to be applied on a global basis and ‘‘not
just for emerging and developing economies’’ (Humphrey
& Loft, 2009, p. 812). The Financial Stability Board, the
IMF and the World Bank now oversee peer reviews aimed
at pushing for compliance with accounting, audit, ?scal
transparency and national statistics standards – not only
in emerging markets but also in the west (Humphrey
et al., 2009).
For scholars studying the emergence of global account-
ability regimes both in the ?nancial sector and elsewhere,
a key question has been the role that national, global, eco-
nomic, cultural and institutional factors play in driving and
de?ning such transnational regimes. Scholars in
hyper-globalist, world society/polity, world systems and
post-colonial traditions have attempted to answer this
question each with different theoretical presuppositions
and conclusions about what drives global governance (for
a review of these different research traditions see
Halliday & Osinsky, 2006). Typical fault lines in the
debates between these traditions include local vs. global,
state vs. globalisation and core vs. peripheral nations.
Hyper-globalists (Fukuyama, 2006; Ohmae, 1995), for
example, consider the state as increasingly irrelevant in
global governance regimes and perceive globalisation as a
liberating, modernising and unstoppable force that dis-
arms it. Conversely, ‘‘sceptic’’ scholars focus on the contin-
ued relevance of state actors in steering global governing
regimes (Zevin, 1992). World systems theorists (Hopkins
& Wallerstein, 1982) focus on the hegemonic power of core
nations and actors over peripheral nations, maintained
through the control of global governing resources and
infrastructures. Post-colonialist scholars (De Sousa
Santos, 2002) emphasise the role of dominant discourses
and norms in the emergence of such regimes and in main-
taining the cultural hegemony of western nations over
weaker nations. They primarily discuss the consequences
of such regimes for weaker nations. World society/polity
theorists (Meyer, Boli, Thomas, & Ramirez, 1997) focus on
the role of world society norms in driving the diffusion of
western-dominated models of governing towards increas-
ing isomorphism. ‘‘Varieties of capitalism’’ scholars (Hall &
Soskice, 2001) emphasise national varieties and the
3
Transparency as used in this paper implies demanding of/providing
unhindered access to information about ones’ ways of being and/or doing
to the public (Garsten & De Montoya, 2008; Hood & Heald, 2006).
4
According to Hoskin (1996 p.266), ‘‘there was never an idyllic moment
when measures of human performance existed purely as measures, neutral
and dispassionate. When measures become targets, ‘ought’ and ‘is’ are
con?ated and description and prescription bound together in ‘constant
mutual implication’.’’
18 A. Mehrpouya / Accounting, Organizations and Society 44 (2015) 15–36
sustenance of national differences in the face of globalisa-
tion pressures.
In the accounting ?eld, studies of the emergence of
transnational accounting and accountability regimes also
tend to fall along these fault lines, with some emphasising
the continued importance of states in driving such regimes
(Arnold & Sikka, 2001) and others accentuating the impor-
tance of world society norms of accounting in driving glo-
bal accounting templates (Power, 2009). Some works have
focused on the role of hegemonic actors such as the US, the
IMF or the Big Four (or Five) (Arnold, 2012; Caramanis,
2002) in the enactment and implementation of transna-
tional codes and accounting standards. Others highlight
the experience of the receiving side of accounting and
audit regimes by exploring the role of the constellation of
discourses, technologies and knowledge forms that
western-dominated international organisations use to
intervene in weaker nations (Neu, 1999; Neu et al., 2006,
2010).
In their recent seminal work on the global enactment
and implementation of bankruptcy law, Halliday and
Carruthers (2009) highlight key gaps in all these research
traditions regarding the origins of and conditions for the
emergence of such transnational regimes. They advocate
that these traditions advance on the basis of a ‘‘rei?ed
and unitary concept of the global’’ (Ibid, p. 6). They empha-
sise that while these traditions capture the con?ict
between central powers and peripheral players (with bat-
tles invariably being won by the centre), the ‘‘battle within
global centres over whose law regulates global markets
gets overlooked’’ (Ibid, p. 6). The authors also indicate that
research on the emergence of global governing regimes has
mostly ignored how ‘‘nation states in disadvantageous
positions within the global balance of power are neverthe-
less able to resist and adapt to global forces and we must
explain the conditions under which such resistance is
possible’’ (Ibid, p. 25). They emphasise the need to study
the increasingly diffused distribution of power in global
governance by analysing the material and symbolic power
of different national actors and their cultural/social
distance from the arenas of transnational governing. As
they show in the case of bankruptcy law enactment and
implementation, weaker national actors in terms of
material power can at times disproportionately in?uence
global governance regimes given their low cultural/social
distance from global governing cultures and networks. In
other words, they are ‘‘closely integrated with global insti-
tutions through revolving personnel, policy in?uence, and
concordance of ideology and practices’’ (Ibid, p. 294).
In their opinion, these lacunae have been reinforced
by the fact that ‘‘social scientists mostly lack access
to the councils of global norm making’’ (Ibid, p. 6). As a
result, ‘‘they either place undue reliance on of?cial
self-presentations and are thus caught by projected
self-images or they rely on rei?ed concepts that owe more
to theoretical deduction than empirical induction’’.
According to the scholars, ‘‘too little theory’’ speci?es
‘‘the conditions under which global consensus on norms
will be possible’’ (Ibid, p. 6).
In an attempt to address the key gaps highlighted
by Halliday and Carruthers (2009), I endeavour to go
beyond the theoretical presuppositions of hyper-
globalists, sceptics, world society/polity, world systems
and post-colonial theories by instead focusing on the
arena, actors, power, processes and laws, texts and tech-
nologies involved in the development of the GAPP. In this
process, I focus on the types of contention and con?icting
views of the different national and international actors
involved and the process through which a consensus
around the norms was achieved. To study how consensus
around the GAPP was achieved, and drawing upon the
accountability literature, I focus on the struggles involved
in settling each of the key dimensions of this accountability
regime. I pay attention to the differences in the views and
accountability objectives of national legislative bodies and
publics in SWF countries, the US and Europe, SWF heads,
western ?nance of?cials and SWF ?nance of?cials repre-
sented in the transnational negotiation processes. By
focusing on the political economy of accountability, this
study seeks to further demystify the crucial role trans-
parency as a governance panacea and powerful world
society norm (Arnold, 2009b; Garsten & De Montoya,
2008) has come to play in structuring contemporary
transnational accountability regimes.
Data sources
This study covers the GAPP negotiations from early
2007 when the US Treasury (UST) began informal bilateral
negotiations with key concerned actors to the formal
negotiations facilitated by the IMF in 2008, leading to the
release of the GAPP in October 2008. Studies of the
enactment of transnational accountability regimes are
frequently hampered by the dif?culty of access to arenas
of global governance (Halliday & Carruthers, 2009). For
the purpose of this study, I was able to access a wide range
of empirical material that provided a unique perspective
on the processes leading to and following the enactment
of the GAPP accountability regime:
SWFs, IMF, World Bank, Organisation for Economic
Cooperation and Development (OECD), UST, US
Congress websites, press releases, reports and discus-
sion papers on SWFs and the GAPP: I used these sources
to study public debates on SWFs, the of?cial position of
actors with regard to the GAPP accountability regime,
and the key events leading to its institution.
98 diplomatic cables related to meetings between the
UST and European and SWF country of?cials published
by Wikileaks (referred to as USMFA_City in the paper).
Diplomatic cables, issued by the US mission in the coun-
try where each meeting is held, are detailed accounts of
these meetings and include a context description,
quotes and analyses. These reports span mid-2007 to
the end of 2008 and provide details on the role of the
UST in preparing the grounds for the GAPP. They also
afford an exceptional level of access to the unof?cial
views of recipient and SWF country of?cials.
Eight interviews: Six with SWF representatives (?ve of
whom were involved in the GAPP process), one with
an IMF senior economist present at two of the three
A. Mehrpouya / Accounting, Organizations and Society 44 (2015) 15–36 19
formal GAPP meetings and one with an OECD represen-
tative in the GAPP process. Interviews lasted on average
60 min. Three were conducted in person and the
remainder by phone (a list of the interviewees is pro-
vided in Appendix 1). These interviews provided details
on the formal GAPP negotiations and how the GAPP text
evolved.
Participant observation: From mid-2007 to June 2009, I
led a research team on the governance and voting prac-
tices of SWFs and their compliance with the GAPP. The
resulting report was released on the anniversary of
GAPP in October 2009 (Riskmetrics, 2009). In this pro-
cess, I (along with the analyst team) interviewed SWF
of?cials from Singapore, Libya, Australia, Canada and
Norway. This provided contacts and contextual infor-
mation that were useful for this research project.
I also relied on a wide range of reports and secondary
literature on SWFs (Balding, 2008; Butt, Shivdasani,
Stendevad, & Wyman, 2008; Chhaochharia & Laeven,
2008; Cohen, 2009; Epstein & Rose, 2009; Gelpern,
2011; Gilson & Milhaupt, 2008; Lyons, 2007; Monk,
2009; Murphy, 2012; Norton, 2010; Truman, 2008;
Truman, 2011).
‘‘Making up’’ sovereign wealth funds: And making them
transparent and accountable
The emergence and rapid proliferation of SWFs repre-
sents a shift from states investing surpluses in national
or regional projects to states investing in international
?nancial markets. Part of a broader trend of the ?nancial-
ization of the economic activities of states (Krippner,
2005; Wang, 2013), certain countries (e.g. in the Middle
East) justify this as necessary, given the lack of suf?cient
investment opportunities in local economies (small size
of the economy versus the size of the fund). For other
SWFs, the of?cial purpose is to diversify away from or to
stabilise local economies in case of crises or volatility
(IMF, 2008b).
Oil-rich countries have a long history of sovereign
wealth funds – the Kuwait Investment Authority, for
instance, is over 60 years old (Riskmetrics, 2009). Recent
increases in the price of oil have led to rapid growth in for-
eign reserves of oil-rich countries. In addition to
well-established SWFs in countries such as Kuwait, Qatar,
the UAE and Norway, other oil-rich nations such as
Russia and Nigeria began establishing SWFs in the late
2000s.
5
(see Table 1).
Since the 1980s, the emergence of export-driven Asian
economies and trade imbalances, particularly with the
US, frequently combined with exchange rate controls, has
led to rapid foreign reserve accumulation in Asian econo-
mies such as China, Singapore, South Korea and Malaysia
part of which has been transferred to their respective
SWFs (ECB, 2006). SWFs from major export-oriented
economies include Temasek and GIC (Singapore), the
Chinese Investment Corporation (China) and Khazanah
(Malaysia) (Butt et al., 2008). Not all SWFs are ?nanced
by natural resources or trade imbalances. For example,
the Australian Future Fund, funded through privatisation,
seeks to ?nance future public pension liabilities.
SWFs have only become a recognised political issue for
western publics since the start of the Global Financial
Crisis in 2006. A number of factors have led to this
increased visibility:
The size of the SWFs has increased dramatically in the
past few years as a result of higher oil prices (Middle
Eastern SWFs) and widening trade surpluses for Asian
export-driven economies (China and Singapore). From
around 3 trillion USD in 2008, the cumulative size of
SWFs grew to approximately 5.6 trillion USD in 2013
(TheCityUK, 2013) and they are estimated to reach 9
trillion USD by 2020 (PWC, 2014).
SWFs have been involved in a few highly publicised and
controversial transactions. A prominent case was
Temasek’s purchase of the Thai telecommunications
company, Shin Corporation, owned by the family of
the then-prime minister of Thailand (Taksin). This case
was central to the ousting of Taksin in 2006
(Lhaopadchan, 2010). Another case, also in 2006, was
Dubai World’s purchase of the Peninsular and Oriental
Steam Navigation Company that would transfer the
ownership of six major seaports of the US to Dubai
World. The transaction was later annulled due to polit-
ical backlash in the US (Mostaghel, 2006). These two
cases were key references in the debates surrounding
SWF security concerns.
The Global Financial Crisis led to lack of liquidity in
western markets and a signi?cant decline in the value
of several western multinationals (MNC). This subse-
quently prompted signi?cant SWF investment in west-
ern ?nancial entities such as Barclays, Citigroup, UBS
and the London Stock Exchange (Balin, 2008).
A large number of SWFs were launched in the 2000s,
including Chinese, Australian, Nigerian, Russian and
Japanese funds. The total number now stands at 66
compared to 12 in 2000. In particular, the launch of
the Russian and Chinese funds was an important factor
leading to the additional politicisation of SWFs. While
China historically invested most of its foreign reserves
in US Treasury bills, the launch of CIC in 2007 repre-
sented a shift in the country’s reserve management
strategy away from the US economy towards more risky
and diverse assets (Murphy, 2012).
Addressing the International Monetary and Financial
Committee’s (IMFC)
6
annual meeting in October 2007, the
UST head, Henry Paulson, pitched the idea of voluntary sets
of best practices for SWFs and recipient countries to be
developed by the IMF and the OECD respectively (Norton,
5
Saudi Arabia has one of the world’s largest oil-based foreign reserves,
but has not launched a formal SWF and most its reserves have been
managed directly by its central bank (Saudi Arabian Monetary Agency)
(CFR, 2009), and as a result had only a permanent observer status in the
GAPP negotiations. In recent years, SAMA Foreign Holdings is frequently
considered a SWF.
6
The IMF’s supervision body created in 1999 and comprised of central
bankers and ?nance ministers.
20 A. Mehrpouya / Accounting, Organizations and Society 44 (2015) 15–36
Table 1
Overview of some of the largest SWFs actively involved in the GAPP negotiations. Source:http://www.sw?nstitute.org and respective SWF websites (as of April 2015) – For media concerns see Riskmetrics (2009),
Cohen (2009) and CRS (2008).
SWF Year founded Source of capital Approx. size Country Stated Mission Examples of Western media and regulatory
concerns – prior to GAPP
Kuwait Investment
Authority
1953 Oil 548 USD Billion Kuwait Providing an alternative to oil reserves
Transfer of wealth to future generations
Opacity – Public disclosure of fund infor-
mation forbidden by law
Abu Dhabi Investment
Authority
1976 Oil 773 United Arabic
Emirates
To make available the necessary ?nancial
resources to secure and maintain the
future welfare of the Emirate
Large size and low public disclosure
including lack of knowledge about its
size and exercise of shareholder rights
Temasek Holdings 1974 Privatization
Exports related
foreign reserves
177 Singapore Charter 2002: to develop economically
viable businesses, retain and create jobs,
and contribute to Singapore’s economic
survival, progress and prosperity
After 2009 – focus on long-term returns
Large holdings and possibility of strategic
in?uence in companies – with little dis-
closure in this regard
History of investments perceived as
politically motivated especially in Asia
Possibility of technology transfer from
portfolio companies
Government Investment
Corporation
1981 Exports related for-
eign reserves
320 Singapore Contribute to the well-being of current
and future generations of Singaporeans
Potential political motives behind
investments
Possibility of technology transfer from
portfolio companies
Norwegian Government
Pension Fund Global
1990 Oil 893 Norway Phasing the entry of oil revenues to the
Norwegian economy
Transfer of wealth to future generations
Qatar Investment Authority 2005 Oil 256 Qatar Strengthen the country’s economy by
diversifying into new asset classes
Opacity – Public disclosure of fund infor-
mation forbidden by law
Australian Future Fund 2006 Privatization 95 Australia Making a provision for unfunded Com-
monwealth superannuation liabilities
Chinese Investment
Corporation
2007 Exports related for-
eign reserves
652 China Diversify China’s foreign exchange
holdings
Potential political motives of investments
Possibility of use towards China’s indus-
trial policy – especially in natural
resource acquisition
Possibility of technology transfer from
portfolio companies
Russian National Wealth
Fund
2008 Oil 81 Russia Stabilization of economy in case of oil
price volatility
Potential political motives of investments
Possibility of fast withdrawal of funds
leading to market instability – given the
small size of the fund compared to the
size of the Russian economy – and its sta-
bilization role
A
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1
2010). This measure was later rati?ed by the IMFC (IMF,
2007).
Based on this mandate, the OECD launched in 2008
its standard-setting process by drawing on its existing
work on the Code of Liberalisation of Capital Movements
(OECD, 2013). The new Sovereign Wealth Funds
and Recipient Countries code was developed and
released at the same time as the GAPP. It emphasised
non-discrimination against SWFs (compared to other
investors), transparency on SWF investment restrictions
of OECD countries, ‘‘standstill’’ (i.e. not adding new restric-
tions for SWFs), and ‘‘unilateral liberalisation’’ (committing
OECD countries to be open to SWF capital even when SWF
countries were not open to foreign capital) (OECD, 2008b).
This process was crucial to ensuring the continued, unhin-
dered ?ow of SWF capital to western ?nancial markets.
For its part, the IMF facilitated the creation of a standing
body, the International Working Group of Sovereign
Wealth Funds (IWG-SWF), to develop a code aimed at
improving SWF transparency, accountability and risk
management (later renamed the GAPP or the Santiago
Principles). At the IMF, work on developing a ?rst draft of
the code began immediately in October 2007, formal
negotiations with SWFs started in June 2008 and the
GAPP was released publicly on October 8th 2008.
The following actors were involved in the negotiations
leading to the enactment of the GAPP by the IMF:
Recipient country representatives: Finance ministers and
of?cials from western countries were present as obser-
vers during the GAPP negotiations.
SWF countries: Representatives from the larger SWFs
and their respective governments were involved in the
informal preparatory work with the UST and actively
took part in the GAPP negotiation processes. The most
in?uential SWFs in terms of power and distance from
transnational governing processes and culture
(Halliday & Carruthers, 2009) were ADIA (UAE),
Temasek and GIC (Singapore), the CIC (China), GPFG
(Norway) and the Australian Future Fund. These funds
were in?uential given their size (ADIA, GIC, QIA, KIA,
GPFG), their powerful state owners (Russia and China)
or their legitimacy in the emerging SWF community
(Temasek, ADIA and GPFG – the latter being projected
as a model for SWF transparency by the IMF (IMF,
2008b)). Funds with low cultural/social distance
included those with large western or western-trained
teams (ADIA, the Norwegian, Australian and
Singaporean funds), with business, ?nance or legal
backgrounds.
International organisations: The IMF provided the secre-
tariat for the GAPP process, co-chaired the meetings and
delivered the GAPP template based on its existing
guidelines especially the Guidelines for Foreign
Exchange Reserve Management (IMF, 2001). The
World Bank and the OECD were observers in this
process.
US Treasury: The UST introduced the idea of a voluntary
code and played a pivotal role in coordinating the pro-
cess through bilateral meetings with involved nations
and organisations in 2007 and 2008. The US was
present both as an SWF country (through the Alaska
fund) and a recipient country.
Professional bodies and accounting ?rms: According to
the IMF, accounting and audit associations and ?rms
were consulted in preparation for the GAPP negotia-
tions (IMF, 2008b). Although accounting ?rms issued
position and discussion papers during the process
(Deloitte, 2008), they were not present at meetings
and were not cited by interviewees as crucial or visible
actors in the process.
Constituting the boundaries of the GAPP accountability
regime
Prior to the start of the formal IMF-facilitated negotia-
tions, through numerous bilateral meetings with both the
SWF and recipient countries, the UST played a key role in
de?ning the accountability problem of SWFs, the targets
of the GAPP regime, the users of the SWF accounts and
the type of action to be taken. This section details the
groundwork which led to setting the boundaries of the
GAPP regime.
What is the problem? Diagnostic struggles
A vast body of articles dedicated to the risks associated
with SWFs were published from 2006 to 2009 in US and
European media. Security issues raised included the risk
of transferring sensitive technologies of western multina-
tionals to oppressive or adversarial regimes and the danger
of western MNCs being exploited to achieve the industrial
or geopolitical objectives of SWF countries such as China
and Russia (Financial Times, 2008). Other issues included
the acquisition of privatised western infrastructure such
as airports, telecommunications or stock exchanges by
SWFs, which would amount to ‘‘cross-border nationaliza-
tion’’ (NYTimes, 2007a; TheStar, 2008). Exercising owner-
ship rights for political purposes through appointing
board members, proxy voting and coercion of portfolio
company managers by SWFs with concentrated holdings
and strategic investments (e.g. Temasek and QIA) were
other sources of concern (Riskmetrics, 2009). Nicolas
Sarkozy, referring to non-western SWFs as ‘‘predators’’
(Euractiv, 2008), exempli?ed the more populist rhetoric
surrounding the risk of SWFs at the time, which cate-
gorised all non-western SWFs as the feared ‘‘others’’.
7
Besides security concerns there were other problemati-
zations of the SWFs based on their effects on markets. Such
concerns included whether some SWFs could get advan-
tage over other investors by using their respective
7
Some countries had speci?c issues with certain SWFs in particular. For
example, Italian stock market regulators were concerned about the
purchase of major, under-priced Italian ?rms by the Libyan Investment
Authority, the SWF of the former colony of Italy (USMFA_Rome, 2008). In
the Netherlands, following the realisation that Barclay’s bid for ABN Amro
was backed by the Chinese Development Bank, the Dutch President
considered it ‘‘naive for the government to just stand by while extremely
wealthy funds shop for Dutch companies’’ (USMFA_Hague, 2007) and
started a consultation aimed at improving SWF investment regulation.
Germany had similar concerns about Russian state-owned banks and SWFs
(NewsWeekly, 2008).
22 A. Mehrpouya / Accounting, Organizations and Society 44 (2015) 15–36
governments’ access to intelligence. Several European
?nance ministers expressed unease over the systemic risks
of SWFs for European capital markets due to their size
(USMFA_Warsaw, 2008) and the relative ‘‘shallowness’’ of
European capital markets compared to the US.
In the US, the House Financial Services Committee and
the Senate Foreign Relations and Banking Committees held
several hearings in 2007 and 2008 on the security dimen-
sion of SWFs (CRS, 2008). The hearings stressed the
above-mentioned risks, yet focused primarily on Chinese
and Russian funds and their underlying political motives
(CRS, 2008).
At the transnational level, US and European efforts
regarding SWFs were spearheaded by their ?nance
ministers and treasuries. UST of?cials played a key
role in negotiating the terms of the diagnosis via meetings
with European countries and the EU (USMFA_Brussels,
2007; USMFA_London, 2008; USMFA_Paris, 2007;
USMFA_Rome, 2008; USMFA_Warsaw, 2008). Framing
SWFs as ‘‘patient, long-term and non-political’’
(USMFA_Brussels, 2007), the UST made it clear that the
goal of the accountability process was to ‘‘help diffuse
protectionist tensions, mitigate any systemic risk and
help guide countries that were setting up new SWFs’’
(USMFA_Singapore, 2007). UST of?cials raised similar
points in their meetings with the SWF countries. The
undersecretary for international affairs of the UST,
declared in a meeting with Kuwaiti of?cials
(USMFA_Kuwait, 2007b):
‘‘Perceptions differ from the facts and it is important to
educate people so they understand that there are no
risks. Otherwise, it may be dif?cult to counter the pro-
tectionist sentiments that are clearly on the rise in the
OECD countries and Asia, as evidenced by recent report-
ing in the ?nancial and popular press, as well as new
legislative initiatives. . . .development of a set of
voluntary, ?exible best practices for SWFs would help
manage these pressures . . . a similar effort for hedge
funds appeared to have quelled demands by European
of?cials for regulatory oversight of the hedge fund
industry.’’
8
This clearly shows that one of the UST’s central objec-
tives was to in?uence public perceptions about SWFs
and, as in the case of the voluntary code for hedge funds
in 2007, to allay regulation by national regulators, espe-
cially in Europe. Such statements also aimed to reassure
SWFs who frequently raised concerns about their unequal
treatment compared to hedge funds and private equity
?rms (USMFA_Beijing, 2008; USMFA_HongKong, 2007;
USMFA_Kuwait, 2008). The latter also had low levels of
disclosure yet were not subject to similar pressures.
SWFs faced signi?cantly more regulatory pressure from
European regulators compared to the US (Bloomberg,
2007) and in 2007 several European countries were consid-
ering introducing regulatory limits on SWF investments.
9
The SWFs needed an urgent solution to address the problem
of regulatory backlash from European countries and poten-
tially the US. In other words, UST concerns about the ‘‘pro-
tectionist sentiments in OECD countries’’ were consistent
with the SWFs’ fear of having their investments curbed.
The ?nal GAPP code highlights the following problem to be
addressed (IMF, 2008a):
‘‘Publication of the GAPP should help improve the
understanding of SWFs as economically and ?nancially-
oriented entities in both the home and recipient
countries. This understanding aims to contribute to
the stability of the global ?nancial system, reduce
protectionist pressures, and help maintain an open
and stable investment climate. The GAPP would also
enable SWFs, especially newly established ones, to
develop, review, or strengthen their organization,
policies, and investment practices.’’
This formulation, fundamentally based on
market-related concerns about SWFs, is close to the posi-
tions of the UST and SWFs. This contrasts sharply with
the Asian Crisis and the Financial Stability Forum’s formu-
lation of the accountability problem as ‘‘crony capitalism,
poor ?nancial governance, and a lack of transparency
within emerging economies’’ (Arnold, 2012, p. 365). Here,
SWFs are referred to as ‘‘economically and ?nancially ori-
ented’’ and the process simply aims to help ‘‘understand’’
them through transparency. However, as with the
response to the Asian Crisis, the UST remained steadfast
in resisting any constraints on global ?nancial integration
and capital ?ows. Indeed, the power of SWF countries,
the UST’s focus on freedom of capital ?ows and market sta-
bility, and the voicelessness of western legislative bodies at
the transnational level led to excluding most of public/leg-
islative bodies’ concerns from the statement of the
problem.
Making whom accountable? De?ning the sovereign wealth
funds
The term ‘‘sovereign wealth fund’’ was ?rst used in an
article by an economist in 2005 (Rozanov, 2005). Given
the diverse missions, histories and structures of these
funds, the process of grouping all government-owned
funds under the SWF category was deemed to entail com-
mensuration pressures by the UST or the IMF and resis-
tance by funds.
According to a diplomatic cable related to a meeting
between UST of?cials and the Polish ?nance minister, the
latter emphasized that several European governments
8
This quote refers to the development of a voluntary code for improving
the transparency of hedge funds in 2007–2008 (NYTimes, 2007b). The issue
of hedge fund opacity was important especially to Asian economies since
they considered greater disclosure essential for reacting effectively to
speculative pressures/runs from these funds, considered one of the causes
of the Asian Crisis (Best, 2005; King, 2001).
9
The US (the Foreign Investments and National Security Act, or FINSA
2007) and Germany developed their own SWF investment scrutiny bodies
to respond to security concerns about the possible political motives behind
SWF transactions. Other European countries such as Italy, France and The
Netherlands debated setting limits on the percentage of shares of a
company that could be owned by a SWF or de?ning certain sectors as
off-limit to SWFs (NYTimes, 2007a). Indeed, the replication of such national
regulatory processes in western countries posed a signi?cant risk for SWFs
and their western expansion.
A. Mehrpouya / Accounting, Organizations and Society 44 (2015) 15–36 23
were keen on including the state-owned enterprises in the
process (the UK government highlighting the need for a
‘‘Gazprom clause’’) to limit ‘‘activities of SWFs or
state-owned enterprises or nominally private companies
from countries where the line between public and private
ownership is unclear’’ (USMFA_Warsaw, 2008). The UST
played a key role in 2007 in de?ning the boundary of the
term ‘‘SWF’’ and in ensuring that it would not be con-
founded with state-owned enterprises (SOEs). During a
meeting with a senior advisor to the European
Commission president, the UST deputy secretary stated
(USMFA_Brussels, 2007):
‘‘. . .many people expressing concern on SWFs are really
concerned about state-owned enterprises (SOEs) and
other state-owned assets.’’
UST staff made similar statements in meetings
with European governments (USMFA_Hamburg, 2007;
USMFA_London, 2008; USMFA_Paris, 2007).
Several funds strongly resisted the SWF label. In an
illustrative case, in a meeting with the UST of?cials, the
German ?nance minister noted (USMFA_Hamburg, 2007):
‘‘Russia, which established a stability fund, does not
want to be compared with China.’’
In a further UST meeting, the head of Mubadala (a UAE
fund owned by the government of Abu Dhabi) expressed
reservations about ‘‘engaging in an exercise that would
associate his fund with other funds that merited concern,
such as Chinese and Russian entities’’ (USMFA_AbuDhabi,
2007d). Similarly, a Mubadala director stated in a meeting
with the UST representative that Mubadala objected to
being ‘‘put into a barrel for everyone to shoot at’’
(USMFA_AbuDhabi, 2007c). KIA’s managing director
rhetorically asked UST of?cials why they would not
include US public pension funds such as CalPERS in such
a process (USMFA_Kuwait, 2007b). In other words, SWF
country of?cials either attempted to exclude themselves
from the regime’s targets or to turn the focus back on
demanders of the accounts (by suggesting that US pension
funds be included in the targets, for example).
By late 2007, several de?nitions for SWFs were circulat-
ing, leading to the inclusion of some government-owned
funds and the exclusion of others. To achieve consensus,
the UST sought to reassure each SWF government that
they were not the primary targets of the accountability
process. For example, they informed Singaporean funds
that the process was intended for other SWFs that failed
to demonstrate Singapore’s ‘‘strong administrative
culture’’ (USMFA_Singapore, 2007). To Kuwaitis (KIA being
the oldest SWF, founded in 1953), they argued that the
process was not intended for ‘‘mature and well-developed
funds’’ since they most certainly already employed best
practices (USMFA_Kuwait, 2007b). In a meeting with ADIA
(the largest SWF at the time), UST of?cials argued that
the process sought to hold accountable smaller funds with
less capacity, not well managed SWFs such as ADIA
(USMFA_AbuDhabi, 2007a). By differentiating between the
‘‘formal targets’’ of the regime and the ‘‘real targets’’, i.e.,
smaller, recently-established funds, the UST attempted to
co-opt the more powerful SWFs.
Following its establishment by the IMF, the
International Working Group helped settle the debate by
providing its own de?nition of SWFs in the GAPP ?nal
report (IMF, 2008a):
‘‘Sovereign wealth funds (SWFs) are special-purpose
investment funds or arrangements that are owned
by the general government. Created by the general
government for macro-economic purposes, SWFs hold,
manage or administer assets to achieve ?nancial
objectives, and employ a set of investment strategies
that include investing in foreign ?nancial assets.’’
This led to the inclusion of all well-known government
investment funds and the exclusion of state-owned
enterprises, thus helping to circumvent objections from
countries with numerous and large SOEs (e.g. Russia,
China, and France).
According to a recent report by the US-China Economic
and Security Review Commission (USCC, 2013):
‘‘Although the Chinese government recognizes only CIC
as an of?cial SWF, the Sovereign Wealth Fund Institute,
an independent consultancy, has identi?ed four Chinese
SWFs.’’
This quote illustrates that contesting the boundaries of
the SWF category as the accountability target continued
even after the launch of the GAPP. According to Garsten
and Bostrom (2008, p. 15), in accountability regimes
‘‘through processes of categorization, certain limited and
manageable parts of reality are included whereas others
are excluded as ‘irrelevant’ or are simply not seen by the
actors’’. This case shows the contentious process and the
discursive strategies through which the boundary of the
accountability targets is negotiated.
Accountability to whom? The public or markets?
For SWFs, major tensions centered on whether they
should be considered state entities accountable to the pub-
lic or market actors accountable to ?nancial markets.
Historically, most SWFs had agendas that went beyond
maximising ?nancial returns. For instance, funds such
as Temasek retained explicit national developmental
objectives, to create jobs and to contribute to Singapore’s
economic survival, progress and prosperity (Temasek,
2002). The Qatar Investment Authority and the Kuwait
Investment Authority undertook development projects in
Syria (Reuters, 2008) and the Norwegian GPFG had a
divestment process to ensure it was not complicit in
any unethical behaviour of its portfolio companies.
Interestingly at the time, the head of the World Bank sug-
gested that SWFs should invest 1% of their capital in Africa
(World Bank, 2008).
The issue of accountability to local populations was
raised a number of times during UST meetings with
SWFs. Whenever con?icts arose between the accountabil-
ity of SWFs to local populations and markets, the UST
would prioritise the market focus. A 2008 report by the
US Charge d’Affaires in the Abu Dhabi highlights
(USMFA_AbuDhabi, 2008):
24 A. Mehrpouya / Accounting, Organizations and Society 44 (2015) 15–36
‘‘In the past, there have been some regional invest-
ments, managed by ADIA and now the Abu Dhabi
Investment Council, that appear to have had an assis-
tance motivation. In addition, UAE investment organi-
zations invest in developing markets. In fact, were the
US Government to push for SWFs to serve as aid agen-
cies, this could risk undercutting our position that
SWF investments should be made solely on economic/-
commercial grounds (rather than to advance geopoliti-
cal goals).’’
This shows how the developmental and public role of
SWFs was considered undesirable and a barrier to them
being ‘‘pure’’ market actors (because it would open the
door to other ‘‘non-market’’ geopolitical objectives). In a
meeting with European Union of?cials, the UST deputy
secretary af?rmed (USMFA_Brussels, 2007):
‘‘Concerns also exist that transparency regarding overall
fund assets could lead to political pressure for these
resources to be used for public ?nance. We must be
careful to seek appropriate levels of transparency that
do not undermine SWF abilities to operate according
to market principles.’’
Should transparency lead to public demands on SWFs,
the UST preferred to avoid pushing the issue as it con?icted
with the ‘‘market principle’’. According to interviewees, the
UST remained adamant during the GAPP process that SWFs
should only focus on economic objectives and ?nancial
returns. Finally, and partly due to the concerns of the
Norwegian SWF that sought to maintain its ethical council,
although the GAPP requests SWFs to focus on
‘‘risk-adjusted ?nancial returns’’, it demands in a
sub-principle that funds disclose any ‘‘non-?nancial objec-
tives’’ (see GAPP clause 19).
10
This is consistent with the
broader shift of global accountability regimes from provid-
ing accounts to stakeholders or publics to focusing on share-
holders and markets (Smyth, 2012; Young, 2006). In this
case however, two ideas of the ‘‘public’’ as imagined users
of accounts had to be marginalised to enable the focus on
markets – western publics and SWF country publics, each
with a different set of public accountability demands.
What is the appropriate action? Prognostic struggles
As in the case of the Asian Crisis (Arnold, 2012), pro-
posed courses of action to address the SWF accountability
gap ranged from bilateral to multilateral, from transna-
tional to national and from hard regulation to voluntary
processes. The UST primarily pushed for a voluntary
multilateral code focusing on transparency as the primary
accountability solution. In meetings with Middle Eastern,
Chinese, Singaporean, Russian and European of?cials,
the UST employed various arguments to legitimise a
multilateral, voluntary approach, hosted by the IMF or
the World Bank (USMFA_Warsaw, 2008; USMFA_Beijing,
2008; USMFA_Dubai, 2007; USMFA_Hamburg, 2007;
USMFA_Kuwait, 2007b; USMFA_London, 2008;
USMFA_Singapore, 2007; USMFA_State, 2008). In the
diplomatic cable about a meeting with the German ?nance
minister, the UST deputy secretary is quoted stating
(USMFA_Hamburg, 2007):
‘‘a developing suspicion among APEC and G20 member
state representatives that the G7 member states are
attempting to restrain them in the area of SWFs. This
needs to be avoided by supporting technical discussions
in multilateral fora.’’
This quote demonstrates that IMF multilateral process
was supposed to diminish the sense that the US or the west
were attempting to limit G20 SWF investments. Similarly,
in a meeting between UST of?cials, the Abu Dhabi
Investment Authority’s managing director and the foreign
affairs director for the Abu Dhabi Crown Prince, the latter
stated (USMFA_AbuDhabi, 2007a):
‘‘SWF guidelines seemed like a good pre-emptive
measure and working with the IMF would remove the
perception that this was a US-imposed solution.’’
This quote shows clearly that for the receiving side,
too, an accountability regime facilitated through a multi-
lateral organisation would be more acceptable in the
eyes of the public compared to direct and public US
intermediation.
In contrast, actors such as the French general director of
treasury and economic policy raised doubts ‘‘that generic
approaches such as rules on governance and transparency
would suf?ce in cases such as Russia and China, where it
was hard to take seriously purported ‘independence’ of
board members, for instance’’ (USMFA_Paris, 2007 –
emphasis in original text). He suggested instead that
SWFs ‘‘keep a low pro?le, e.g., staying below three per cent
interest in any one company and investing through inter-
mediary funds rather than directly’’ (USMFA_Paris, 2007).
Other actors, such as German ?nance of?cials, argued for
the exclusion of ‘‘sensitive’’ sectors such as defence, tele-
com networks, steel, electricity and food. In response, the
US national security council deputy warned, ‘‘rather than
debate this, the US and the EU must ?nd a cooperative
solution that does not require legislation’’ (USMFA_State,
2007).
In a meeting with the UST of?cials the Singapore
?nance minister proposed that, ‘‘the United States would
get better traction with a quiet, informal, bilateral
approach than with institutionalizing the work multilater-
ally’’ (USMFA_Singapore, 2007). The UST international
monetary policy director, responded:
‘‘We were already engaged bilaterally with different
SWFs. In addition, a multilaterally-agreed framework
for SWF best practices could also help diffuse
10
Interestingly, since 2007, all major SWFs have formulated or reformu-
lated their public statements on mission and strategy in pure economic
terms. For example, Temasek revised its charter in August 2009, altering its
previously-stated mission of ‘‘develop economically viable businesses,
retain and create jobs, and contribute to Singapore’s economic survival,
progress and prosperity’’ (Temasek, 2002). The new charter describes the
fund as an investment company managed along ‘‘commercial principles’’,
aiming only to deliver long-term value for its shareholders. The new charter
makes no mention of Temasek’s sole shareholder (Temasek, 2009), the
Government of Singapore (USMFA_Singapore, 2009), despite the fund
having been run by the wife of the Prime Minister since 2002 (NYTimes,
2014).
A. Mehrpouya / Accounting, Organizations and Society 44 (2015) 15–36 25
protectionist tensions, mitigate any systemic risk, and help
guide countries that were setting up new SWFs to think
through issues carefully’’ (emphasis added).
As shown, the UST pursued a bilateral approach to
addressing issues with SWFs. The multilateral and volun-
tary process was deemed to primarily mitigate issues of
market stability and openness including ‘‘systemic risks’’
and ‘‘protectionist tensions’’ and to help ‘‘new SWFs’’. As
illustrated, amongst the solutions proposed, the voluntary,
multilateral approach was established principally through
the push of the UST and the receptiveness of more power-
ful SWFs to such a voluntary regime. Again due to the
strong position of SWF countries, this case presents radi-
cally different dynamics from the Financial Stability
Forum where the UST (and western states), in particular,
was a visible and vocal arbiter (Arnold, 2012).
Although the UST did engage in bilateral negotiations
with a broad set of SWFs, funds from the UAE and
Singapore were particularly central to the groundwork it
undertook. In fact, the UST considered these funds as regio-
nal leaders who would be followed by others in their local-
ities. This is illustrated by the ADIA co-chairing the
IWG-SWF, responsible for developing the GAPP.
Furthermore, press releases following the launch of the
GAPP were issued by the ADIA on the behalf of other
Gulf funds (OECD, 2008a). A diplomatic cable on a meeting
between UST of?cials and the Singaporean ?nance minis-
ter highlights (USMFA_Singapore, 2007):
‘‘Given the large size, long history and perceived suc-
cess of funds such as Temasek and GIC, any effort to
develop international best practices that did not include
Singapore would have less legitimacy among many
Asian countries now attempting to establish their own
SWFs.’’
In parallel to the broader groundwork setting the
GAPP’s boundaries, the UST engaged in ‘‘quiet consulta-
tions’’ with the UAE and Singapore, leading to the
release of the Singapore Principles in March 2008 (right
before the start of the of?cial IMF-led GAPP negotia-
tions). According to the UST undersecretary for interna-
tional affairs in a 2007 meeting with UAE of?cials: ‘‘to
jumpstart the IMF-led best practices effort, the US,
UAE and Singapore could begin quiet consultations as
regional leaders to outline investment principles for
SWFs’’ (USMFA_AbuDhabi, 2007d). The UST press release
for the Singapore Principles states (US-Treasury,
2008):
‘‘The United States, Abu Dhabi, and Singapore, being a
group of nations with SWFs and a country receiving
investments from SWFs, have a common interest in an
open and stable international ?nancial system. We sup-
port the processes underway in the International
Monetary Fund (IMF) and the Organization for
Economic Cooperation and Development (OECD) to
develop voluntary best practices for SWFs and inward
investment regimes for government-controlled invest-
ment in recipient countries, respectively . . . We hope
that the IMF and OECD’s work can build upon these
basic principles.’’
The Singapore Principles included a de?nition of SWFs
and ?ve principles for SWF countries, emphasising their
need to focus on a purely commercial and non-political
agenda to disclose governance structures. It also outlined
four principles for recipient countries accentuating the
‘‘freedom of capital’’ and the ‘‘fair’’ treatment of SWFs (as
with any other market actor) (US-Treasury, 2008). This
set the tone and the boundaries of the regime, while the
negotiation of the details of the accountability relationship
was left to the formal GAPP negotiation process which had
a wider participation and public visibility.
Settling the process and technologies of the
accountability relationship
The formal negotiations took place over three sessions
from June to September 2008 in Washington, Singapore
and Santiago (Chile). During this period, three drafting sub-
committees headed by SWF representatives took over the
revision of the original draft and ?nalisation of the code.
The IMF provided the original outline for GAPP and the sec-
retariat for the meetings. An IMF executive and the under-
secretary of the Abu Dhabi ?nance department co-chaired
the meetings. According to interviewees, during the ?rst
meeting in Washington, the IMF tended to be more pre-
scriptive, considered somewhat ‘‘heavy-handed’’ by certain
funds. Given contestation from a number of funds (partic-
ularly from the Middle East) from the second meeting
onwards, SWFs began taking over with the IMF playing a
less visible role. Contentious issues at stake included the
logic underlying SWF investments (whether purely eco-
nomic or not), funds’ relationships with respective local
governments, their investment portfolio and the type of
shareholder rights/in?uence exercised within, and their
size/capital ?ows, given the perceived implications for
the macroeconomic stability of western markets (see the
GAPP for further details). In the following section, I elabo-
rate on the struggles involved in negotiating the standards,
surveillance and compliance components (Wade, 2007) of
this accountability regime.
From standards of ideal SWF to transparency
Compared to other recent transnational accountability
processes involving non-western states (Arnold, 2005,
2012), the ?nal GAPP remains vague on technical details
and includes no speci?c guidelines or standards in areas
such as accounting, audit, risk management, investment
management and governance. Neither does it cross-
reference other international codes. Regarding accounting
disclosure, GAPP 11 in the ?nal code states:
‘‘GAPP 11. An annual report and accompanying ?nancial
statements on the SWF’s operations and performance
should be prepared in a timely fashion and in accor-
dance with recognized international or national
accounting standards in a consistent manner.’’
Similarly for audit, GAPP 12 states:
‘‘The SWF’s operations and ?nancial statements should
be audited annually in accordance with recognized
26 A. Mehrpouya / Accounting, Organizations and Society 44 (2015) 15–36
international or national auditing standards in a consis-
tent manner. . . [The commentary for this clause later
states that] The audit procedures should be open for
review.’’
This leaves the choice of accounting and audit standards
to the discretion of SWFs and stops short of requiring inter-
national accounting and audit standards – the hallmark of
other recent transnational regulatory processes involving
non-Western countries (e.g. the Financial Stability Forum
– see Arnold, 2012; Halliday & Carruthers, 2009).
However, the Big Four audit ?rms have jumped on the
bandwagon, providing services such as tax management
assistance and auditing (Deloitte, 2008) to SWFs. As
Norton (2010, p. 515) points out, the GAPP in a practical
sense ‘‘opens the door to the major international account-
ing ?rms to take a role in shaping these ‘standards’’’.
In the same vein, for risk management the code
demands that:
‘‘GAPP 22. The SWF should have a framework that iden-
ti?es, assesses, and manages the risks of its operations.
. . .
GAPP 22.2. Sub-principle. The general approach to the
SWF’s risk management framework should be publicly
disclosed.’’
For accountability structures, the code recommends:
‘‘GAPP 10. Principle. The accountability framework for
the SWF’s operations should be clearly de?ned in the
relevant legislation, charter, other constitutive docu-
ments or management agreement.’’
It is interesting to observe that since de?ning and regu-
lating based on speci?c technical speci?cations and stan-
dards were deemed impossible, the regulatory process
replaced speci?c standards with a demand for the public
disclosure or transparency of SWF structures, processes
and practices. Following such disclosure, standards for
judgment were to be later developed by market actors, pri-
marily international accounting, audit and consulting
?rms.
From compliance pressures to transparency
A further contentious topic concerned veri?cation and
compliance processes. At several points during the bilat-
eral negotiations, UST of?cials emphasised the
non-binding and voluntary nature of the code. In an illus-
trative case, in a meeting with Kuwaiti of?cials, the UST
international monetary policy director stressed (USMFA_
Kuwait, 2007a):
‘‘The US was not trying to tell SWFs how to manage
asset allocation or even asking for full disclosure of
speci?c investments but rather promoting the develop-
ment of a non-binding set of common principles for
governance and risk management to which SWFs could
voluntarily subscribe.’’
The IMF was initially planning to include a central ver-
i?cation process similar to the one introduced following
the Asian Crisis (the ROSCs) to push for compliance,
although this was later abandoned given resistance from
funds. As one interviewee stated, ‘‘it was hard to reach
an agreement on veri?cation. Early drafts tried to include
it one way or another, something that the IMF could under-
take as part of some consultation or other. Someone else
like an external auditor could be hired to do this, but it
ended up as a type of a political document or a voluntary
set of principles that have to be adhered to.’’
The ?nal version of GAPP 24 on veri?cation reads: ‘‘A
process of regular review of the implementation of the
GAPP should be engaged in by or on behalf of the SWF’’.
This leaves veri?cation to the discretion of the SWF and
it can be carried out internally.
Following the release of the GAPP on October 13th
2008, the United Arab Emirates Finance Minister stated
on behalf of all Middle Eastern SWFs (OECD, 2008a):
‘‘In view of the voluntary and consensus-based charac-
ter of the initiative, we are not convinced of proposals
to monitor the implementation of the Principles. We
have previously cautioned against ‘voluntary’ initiatives
by the Fund (International Monetary Fund) from devel-
oping into ‘mandatory’ practices, which would detract
from the ownership of these Principles by the SWFs.’’
(emphasis in original document)
On the same day following the release, the EU stated
(OECD, 2008a):
‘‘. . . It is now important that the GAPP is effectively
implemented by a suf?ciently large number of SWFs.
It is equally important that a standing group is estab-
lished to monitor the implementation of the GAPP.’’
This illustrates the contrasting views of the EU and
SWFs on GAPP veri?cation and compliance processes. As
of September 2014, neither the IMF nor the standing body
created in the wake of the code’s release (the International
Forum of Sovereign Wealth Funds) has introduced any
such veri?cation processes. A range of private rankings
and ratings of the SWFs’ compliance with the GAPP and
their transparency have however emerged (Linaburg,
2012; Riskmetrics, 2009; Truman, 2011). This contrasts
with the IMF and the World Banks’s role in issuing ROSCs
and the use of conditional loans to push for compliance
(Humphrey et al., 2009). As a Wall Street Journal article
in September 2008 highlighted (WSJ, 2008):
‘‘It is likely that the principles will get a warm welcome
from treasuries in wealthy nations. But it is far from
clear that they will reassure lawmakers and other critics
within those countries. The IMF won’t monitor,
let alone police, the way the funds apply the principles.
Rather, the funds themselves are likely to set up some
kind of loose oversight arrangement.’’
This quote highlights the difference between the expec-
tations of western treasuries and those of legislative bodies
with regard to evaluation and compliance.
Challenging transparency/surveillance pressures
The previous section described how attempts to set
technical standards in areas such as accounting, audit
A. Mehrpouya / Accounting, Organizations and Society 44 (2015) 15–36 27
and risk management, and centralised veri?cation mecha-
nisms were replaced by transparency demands in those
areas. This is another example where the ‘‘international
regulatory system relies chie?y on transparency as a
mechanism for governing risky and crisis prone global
?nancial markets’’ (Arnold, 2009b, p. 62).
The ?rst public report released by the IMF, Sovereign
Wealth Funds – A Work Agenda, released in March 2008
and setting out the contours of the GAPP process states
(IMF, 2008b):
‘‘Transparency is of interest to very different groups . . .
the case for such a (transparency) focus is twofold. First,
clear governance structures will help foster accountabil-
ity and a disciplined and stable investment policy which
reduces ?scal risk and promotes ?nancial stability.
Second, transparency contributes to the ef?cient alloca-
tion of resources by ensuring that markets and the public
have information to identify risks and better assess SWF
behaviour’’ (stress added).
This shows that early in the process, transparency was
formulated both as useful for market governance and for
public accountability in SWF countries. The most sensitive
and contentious areas were transparency of size,
short-term returns, asset allocation/portfolios and the
exercising of shareholder rights. Disclosing size and
returns would lead to local public scrutiny and demands,
while asset allocation and the exercising of shareholder
rights would result in a greater scrutiny of SWFs regarding
political motives and strategic use of capital.
As mentionedearlier, the UST believedthat transparency
hadtobe requiredif it wouldnot leadtopublic demands dis-
torting the commercial and market-based focus of SWFs.
The Middle Eastern funds represented by ADIA and the
Qatari and Kuwaiti spokespersons were largely apprehen-
sive about their local population’s access to information
and according to an interviewee ‘‘opinions varied greatly
on the extent to which citizens of a country have a need
to know.’’
These funds publicly disclosed very little information
beyond the naming of their executive team and board. In
a meeting between the UST, the UAE SWFs and ?nance of?-
cials, the Managing Director of ADIA declared
(USMFA_AbuDhabi, 2007a) that ADIA did not disclose the
size of its foreign investments publicly and that ‘‘con?den-
tiality was a policy directed from above’’ (emphasis added).
The Qatari and Kuwaiti of?cials cited local laws as the key
barriers to transparency. QIA of?cials mentioned in a meet-
ing with UST of?cials that ‘‘only ?ve or six people in Qatar
know’’ about its asset allocation, that such disclosure is
against local regulations and that ‘‘even to the IMF, it is
only ‘whispered’’’. (USMFA_Qatar, 2008 – emphasis in orig-
inal document). This demonstrates how Qatari of?cials did
not perceive as relevant any bene?ts from disclosure
beyond those for investors and the IMF. UAE of?cials were
in addition concerned about the access of other emirates
and Arab publics to information because it could lead to
expectations for ?nancial assistance since ‘‘some Arab
states viewed oil as part of the Arab patrimony and not
the resource of any one country’’ (USMFA_AbuDhabi,
2007b – emphasis added). They emphasised that they
preferred not to raise their ‘‘public pro?le or talk to the
media’’ (USMFA_AbuDhabi, 2007a).
The concerns of Singaporean funds about transparency
seem to have been different as they appeared more appre-
hensive about the impact of such transparency on the
fund’s business operations due to the resulting media
and public pressure. In a meeting with UST of?cials, the
Singapore ?nance minister af?rmed (USMFA_Singapore,
2007):
‘‘It would be inappropriate to disclose the total assets of
GIC because it would create domestic pressure to
reduce savings for future needs.’’
Similarly, at the time, a senior advisor to the Chinese
government highlighted that such disclosure could distract
the fund from ‘‘focus on maximizing long-run returns, sub-
jecting it to greater political interference and media
second-guessing.’’ (USMFA_HongKong, 2007).
The Norwegian SWF af?rmed that open access to infor-
mation constituted a right of the Norwegian people as set
out in the Freedom of Information Act (Regjeringen,
2010). According to interviewees, the Norwegian fund is
run with the local public as the primary stakeholder and
the national politics is the key concern in the fund’s public
disclosure. The IMF and other international audiences are
considered secondary users of information, contrasting
with Middle Eastern and Asian funds that disclose informa-
tion primarily for international stakeholders.
Further to the resistance levelled against public disclo-
sure, certain details relating to disclosure clauses were
dropped during the negotiation process, and several public
disclosure requirements removed altogether. Nonetheless,
16 out of the 24 principles recommend the increased pub-
lic disclosure in areas including funds’ sources, purpose,
legal structure, governance structure, investment policy,
general approach to risk management and ownership
rights. Interestingly, the word ‘‘transparency’’ is not men-
tioned once in the GAPP clauses, in stark contrast to the
original IMF Working Agenda (IMF, 2008b) where the term
was employed 47 times.
Several years after the launch of the code, western
media and regulatory bodies continue to emphasise the
lack of SWF transparency (Financial Times, 2012b; USCC,
2013 – see also the SWFs’ transparency ranking by
Linaburg & Maduell, 2012). At the same time, funds such
as Temasek, CIC, QIA and KIA have become much more
assertive in their international investments. For example,
in 2012 QIA purchased a 20% stake in BAA, the British ?rm
that owns ?ve British airports including London Heathrow.
In the same year, QIA (through its subsidiary Qatar Holding
– chaired by the Qatari Prime Minister) ‘‘confounded the
mining world after building up a 12 per cent stake in
Xstrata and effectively blocking its merger with Glencore
by demanding a better deal’’ (Financial Times, 2012a).
Chinese funds, now amongst the largest in the world, have
been active in the acquisition of natural resource assets in
Australia, Canada, Russia and Africa, as well as the pur-
chase of shares in the Chinese ?nancial sector (Murphy,
2012). This level of SWF activity and the funds’ explicit ties
with national politics was unthinkable at the peak of the
public debate surrounding SWFs in 2008.
28 A. Mehrpouya / Accounting, Organizations and Society 44 (2015) 15–36
Discussion
The case of SWFs and the GAPP is a rare example of
building a transnational accountability regime from
scratch for a hitherto vaguely de?ned category of organisa-
tions, mostly from non-western contexts. A host of recent
studies in accounting and global governance have dealt
with the institutional dynamics of the emergence of the
‘‘new ?nancial architecture’’ following the Asian Crisis
and the Global Financial Crisis, and the central role of
transparency, accounting and audit standards in this trans-
formation (Arnold, 2012; Halliday & Carruthers, 2009;
Humphrey & Loft, 2009; Humphrey et al., 2009; Wade,
2007, 2010). While the GAPP case is part of the broader
restructuring of the global ?nancial architecture, it is sig-
ni?cantly different from other cases because of the
remarkable level of power and voice of non-western coun-
tries in the process. Attempting to regulate well-endowed
and fast-expanding funds owned by countries such as
China and Russia at a time when western ?rms were des-
perate for liquidity led to a vastly different distribution of
power compared to past cases. Traditional sources of coer-
cion used by the IMF, such as conditional loans, were inef-
fective in this case. In addition, larger SWFs endowed with
western-trained teams had much more capability and
proximity to world society culture (Halliday & Carruthers,
2009) and could play a more central role in the transna-
tional governance process. This is a fundamental difference
compared to the role of the Asian economies during the
institution of the Financial Stability Forumin the aftermath
of the Asian Crisis. As a result, during the negotiations lead-
ing to the settlement of each aspect of the GAPP account-
ability regime, tensions were not simply between the
‘‘west and the rest’’ (Hall, 1992) or the core and peripheral
states (Hopkins & Wallerstein, 1982). Instead, complex
processes of co-optation and coalition building took place,
transcending these traditional boundaries.
Despite the diversity and power of the targets of the
accountability regime, a key factor that made achieving
consensus around a voluntary code primarily focused on
transparency possible was that the interests and goals of
the UST and SWF countries’ ?nance of?cials were generally
aligned around maintaining SWF capital ?ows to the west.
While the US senate, congress and European of?cials
expressed qualms about the security implications of
SWFs, the UST’s work was structured by two norms: main-
taining the freedom of capital ?ows of SWFs and avoiding
the hard regulation of SWFs in recipient countries. This
was driven by the immediate need of American multina-
tionals for SWF capital during the global ?nancial crisis,
and the longer-term focus of the UST on ensuring that
the US dollar and US assets remained the preferred desti-
nation for resource and export-driven surpluses of SWF
countries (CRS, 2008). Moreover, as expressed in many
quotes, the UST demonstrated a fundamental commitment
to the ‘‘freedom of capital ?ows principle’’ which in the
post-Washington Consensus era has been fundamental to
UST policy (Arrighi & Zhang, 2011).
In turn, SWF countries sought to ensure that western
publics’ concerns about them were tamed and that their
access to western ?nancial markets was maintained. For
certain funds, particularly from the Middle East, this was
crucial given the insuf?cient investment opportunities in
local markets and for some other funds such international
investments were central to their diversi?cation strategies.
This led to a singular focus by the UST and SWFs on achiev-
ing a code that would help tame the concerns of western
publics and regulators, yet not cause any ‘‘market distort-
ing’’ public demands in SWF home countries. As a result,
the UST’s expectations of the GAPP process were more clo-
sely aligned with the expectations of SWFs (including
Middle Eastern, Singaporean and even Chinese and
Russian funds) than with those of European and US legisla-
tive houses.
As shown, the UST and Singaporean and Abu Dhabi
state of?cials/funds were key actors in the coalition that
steered the process. The UST was very clear about the need
to have on board these other players since they were con-
sidered to be highly legitimate regional leaders that other
funds would follow. The UST did attempt to co-opt other
funds, but none were involved in the more intimate steer-
ing of the process (as evident in the release of the
Singapore Principles). Conversely, as well as being new
actors in the SWF space, Chinese and Russian funds, for
example, were not traditional US allies and were politically
dif?cult to co-opt. Others such as Kuwait and Qatar were
not ‘‘core’’ actors in the SWF ?eld. In other words, the
UST co-opted ‘‘powerful’’ (large SWFs with high regional
legitimacy and low cultural/social distance from global
governing arenas)
11
and ‘‘friendly’’ SWF states in the core
coalition (e.g. Singapore and the UAE), briefed and managed
the reactions of ‘‘powerful but less friendly’’ SWF states (e.g.
China and Russia) and mostly ignored weaker or ‘‘periph-
eral’’ SWF states (e.g. Venezuela, Chile and Iran).
Interestingly, European actors – traditionally considered as
global core actors – in this case were excluded from the core
coalition: instead, the coalition managed and/or tamed their
concerns. A strong case of ‘‘actor mismatch’’ (Halliday &
Carruthers, 2009, p.19) – the mismatch between actors
involved in the enactment of the regime and those affected
or concerned by it at the national level – led to a situation
where the focus was on maintaining capital ?ows.
As Table 2 shows, each aspect of the accountability
regime began with several competing templates.
Regarding the targets of the regime and de?nition of the
‘‘SWFs’’, different actors attempted to limit or extend its
boundaries – or to exclude themselves from it. Some
European countries aimed at including SOEs (the
Gazprom clause), some SWFs proposed including
Western pension funds, and the UST emphasized the need
to differentiate between the SWFs and the SOEs – to avoid
the sensitive political issues related to the latter. Boundary
setting for the accountability targets was one of the very
contentious aspects of this regime and the debates about
11
‘‘Power’’ in this paper is based on Halliday and Carruthers’s (2009)
concept of power in global governance, driven by the material and symbolic
(legitimacy and alliances/networks) power of a nation and its social/cul-
tural distance from global governing arenas/culture. For further details, see
the analysis of SWF power dynamics on page 20.
A. Mehrpouya / Accounting, Organizations and Society 44 (2015) 15–36 29
which fund is and which fund is not a SWF continues to
present.
The ‘‘accountability problem’’ that the GAPP was to
address, according to the UST and the larger SWFs, was pri-
marily about avoiding ‘‘protectionist regulatory backlash’’
from western regulators. The central role of these actors
in steering the process meant that a range of western secu-
rity concerns were excluded in the formulation of the
problem, with the ?nal formulation focusing on market
stability, the prevention of protectionist backlash from
Table 2
Struggles during enactment of the GAPP accountability regime.
Accountability
process
Different templates Struggles Final settlement
Constituting the
Boundaries of
the
Accountability
Regime
Establishing the
accountability
problem
(diagnostic
struggles)
Potential political and
security risks associated
to SWFs in recipient
countries
‘‘Protectionist backlash’’
against SWFs’ investments
Systemic risk of SWFs for
?nancial markets
Lack of public accountabil-
ity in SWF countries
Tensions between market and public
accountability ‘problems’ – with UST
focusing on ‘‘openness and stability’
of markets and SWFs focused speci?-
cally on regulatory backlash against
them
Legislative bodies and media in the
West focused on security issues
Maintaining open and
stable markets, mitigating
protectionist backlash,
helping new/smaller funds
Identifying the
accountability
targets
Including State-Owned
Enterprises (SOEs)
Including public pension
funds among targets
Including only government
owned funds that are not
separate legal entities
Including only government
funds that invest in inter-
national equity markets
Resistance by some funds to be catego-
rized as SWFs or attempts to include a
wider set of investors including pen-
sion and hedge funds
Some European countries demanding
the inclusion of state-owned enter-
prises among targets
Exclusion of SOEs –
inclusion of all major oil
and exports ?nanced funds
Establishing the
imagined users
of accounts
Western legislative bodies
and publics – to address
concerns over security
SWF country/region pub-
lics – issues of develop-
ment investment and
public accountability
International markets - to
ensure fair competition
with other investors and
mitigating systemic mar-
ket risks
The US Treasury keen on maintaining
SWFs as pure market actors
Some Middle Eastern SWFs concerned
about redistributional pressures from
regional publics
Some SWFs such as the Norwegian
fund concerned because it has a divest-
ment process based on ethical criteria
Marginalizing state role of
SWFs – focus on
maintaining SWFs as pure
market actors
Establishing the
accountability
action
(prognostic
struggles)
Bilateral negotiations with
the UST
Multilateral process at the
IMF
National regulation by
excluding sensitive sec-
tors, and/or capping the
ownership of SWFs in
?rms
Preference of several European coun-
tries for hard regulation – and limits
on SWF investments
Some SWFs preferred a low pro?le
bilateral approach
UST preference for a transnational,
multi-lateral voluntary code
Multilateral process –
voluntary code – facilitated
by the IMF
Settling the Process
and
Technologies of
the
Accountability
Relationship
Establishing the
standards of the
ideal self
Referring only to principles
– and avoiding speci?cs
Referring to IFRS, IASs and
other existing standards
Resistance by funds against ‘prescrip-
tive and intrusive’ code – backed by
UST
No mention of
international standards –
replaced by transparency
Pressures for
compliance with
standards
IMF as the evaluator
SWFs themselves as
evaluators
Imposing an independent
external audit
SWFs resisted a mandatory evaluation
regime
UST also expressed support for a vol-
untary, non-binding regime
EU pushed for having an evaluation
regime
Focused on transparency of
evaluations – rather than
introducing an evaluation
process
Transparency
pressures for
account
production
Transparency enabling
SWFs’ local public
accountability
Transparency addressing
Western concerns about
SWFs’ political motives
Transparency aimed at the
?nancial market’s infor-
mation needs
Middle Eastern and Asian funds raised
different concerns about local public’s
access to information
The UST aimed to include transparency
that would not lead to public demands
which could go against ‘‘market
principle’’
Mostly broad – focused on
ensuring SWFs are focused
on ?nancial returns
30 A. Mehrpouya / Accounting, Organizations and Society 44 (2015) 15–36
receiving countries and assisting new funds. Similarly, due
to the aligned interests of SWFs and the UST, local SWF
country publics were excluded from the ‘‘imagined users’’
of SWF accounts. Funds only had to provide accounts to
?nancial markets to ensure market ‘‘stability and open-
ness’’, meaning that the potential for SWF investment in
areas such as poverty alleviation, development and envi-
ronmental projects was marginalised in discussions and
ignored or excluded from GAPP negotiations.
As for ‘‘accountability action’’, the option selected from
propositions ranging from national regulation to transna-
tional bilateral and multilateral norm setting was to
develop a voluntary code in a multilateral arena (the
IMF). Such accountability action and its wide communica-
tion would help address the concerns of western legisla-
tors. Combined with the OECD code for recipient
countries, this would lead to avoiding the hard regulation
of SWF investments. In other words, the accountability
problem was formulated and the imagined users – markets
– de?ned such that the recommended action would not be
interventional, but would instead help address ‘‘market
distorting’’ public pressures on SWFs. Further, to avoid
adversarial reaction from the SWFs, the process had to be
seen not as the US/West imposing a regime, but as a partic-
ipatory process managed by a multilateral organisation:
the IMF.
The UST and the core coalition attempted to stabilise
the boundaries of the regime by releasing the Singapore
Principles before the formal, more inclusive and highly vis-
ible GAPP negotiations began. During the formal negotia-
tions, while the details of standards, compliance and
transparency pressures were challenged and foiled to dif-
ferent degrees, the regime’s boundaries set prior to the
negotiations remained mostly unchanged.
To achieve consensus during the formal negotiation
processes, the GAPP excluded international standards in
areas such as accounting, audit and risk management, as
well as an international compliance and evaluation regime.
In contrast to other cases such as the Asian Crisis, these
could be excluded partly because of the earlier under-
standing between SWFs and the UST that the code would
not be binding and intrusive. Most such clauses were
replaced by transparency requirements, leaving standard
formulation and compliance to other forums and market
actors. This is another case where transparency is treated
as a panacea (Arnold, 2012) and structuring the rest of
the accountability regime is delegated to markets and their
imagined disciplining power.
With regard to transparency pressures, too, there were
varying concerns depending on the national institutional
setting of the SWFs and their relationships to their local
publics (as summarized in Table 3). In the discussions
around the powerful norm of transparency, each party
was aiming at account production for a speci?c ‘‘public’’
while aiming to limit accountability demands from other
imagined publics. This points to the tortuous relationship
between accountability and transparency or public
disclosure.
For the UST, transparency should not enable public
accountability claims that would prevent SWFs from oper-
ating as ‘‘pure’’ market actors. For the Norwegian fund it
was primarily about accountability to the local public, for
Singapore and the UAE funds, it was about providing
accounts to the IMF and the recipient countries. Asian
funds were primarily concerned about the effects of the
public disclosure of their returns and portfolios because
of the implications of local public demands on their busi-
ness operations. Some Middle Eastern countries were anx-
ious about how information disclosure might result in
more national and Arab public pressures for greater
re-distributional policies and stressed the ruling families’
monopoly on information as a key barrier to public disclo-
sure. In other words, some SWF country of?cials saw the
legitimate public for transparency to be the local popula-
tion (Transparency as a public right), some saw disclosure
as needed for international market actors/regulators but
Table 3
Ideal types for attitudes to transparency.
Ideal types Type of concerns about Transparency Institutional setting Fund closer to this
ideal type
Preferred/intended
users for information
Preferred type of
disclosure
Transparency
as a public
right
None Decentralized
governance
Institutionalized citi-
zens’ information rights
Norwegian
Government Pen-
sion Fund –
Global
Local public
Public disclosure
Transparency
as a market
instrument
Access of local public to information – Intru-
sion of transparency with fund operations
due to public/media demands
Concerned primarily about disclosing fund’s
short term returns
High level of depen-
dence and interaction
with capital markets
Asian funds such
as Temasek of
Singapore
International
Markets –
regulators
Targeted disclo-
sure/selective
public disclosure
Transparency
as power
Access of local public to information – local
demands for redistributive and development
policies
Concerned especially about disclosing the size
of the fund and increase of public visibility in
general
Centralized power and
information structures
Middle Eastern
SWFs such as
ADIA, QIA and KIA
International
Markets –
regulators
Targeted disclo-
sure/no public
disclosure
A. Mehrpouya / Accounting, Organizations and Society 44 (2015) 15–36 31
were concerned about the business/market implications of
its public disclosure (Transparency as a market instru-
ment) and some aimed to maintain monopoly on informa-
tion because of concerns about redistributional demands
from their local publics, who had historically received little
information about the way they were governed
(Transparency as power).
Understanding these competing and complementing
ideas about the imagined ‘‘publics’’ for transparency and
the modes of accountability that such transparency can
enable is crucial to understanding the fast expanding role
of transparency in global governance regimes (Arnold,
2009a, 2009b, 2012) and can inform the broader debates
about the link between transparency and accountability
in governing (Roberts, 2009).
The UST was aware of the concerns of large Middle
Eastern and Asian SWFs about transparency and foresaw
the challenges that the GAPP process would have in
improving their public disclosure (USMFA_AbuDhabi,
2007a; USMFA_Singapore, 2007). However, it considered
the GAPP an effective tool for disciplining new and smaller
SWFs (USMFA_BandarSeriBegawan, 2007). This is consis-
tent with other studies which have shown that compliance
and change are more likely to occur among marginal and
peripheral actors (Clemens & Cook, 1999). In other words,
the GAPP was structured not as a tool for recipient coun-
tries or SWF country publics to hold SWFs to account,
but as a mechanism for the UST and core SWFs to tame
western regulatory concerns through ‘‘theatres of account-
ability’’ and to hold smaller, new and ‘‘peripheral SWFs’’ to
account. The on-going concerns about SWFs lack of trans-
parency raised in western media several years after the
release of the code further illustrates this point.
Below, I discuss three implications of this case for
debates on the political economy of accounting and
accountability.
Studying accountability processes and the marginalisation of
immanent ideas
Mobilising the accountability literature (Garsten &
Bostrom, 2008; McKernan & McPhail, 2012; Roberts,
1991; Roberts, 2009; Roberts & Scapens, 1985), this study
identi?es the processes involved in instituting the GAPP
accountability regime. Differentiating the accountability
regime from the accountability relationship proves espe-
cially useful because it brings attention to the
boundary-setting processes that help position a regime in
the broader global governance apparatus by establishing
the accountability problem/solution and the users/provi-
ders of accounts. In the GAPP case, the regime’s boundaries
were ?nalised and communicated (through the Singapore
Principles) before the formal negotiations started.
As shown, different actors voiced different ideas (col-
umns 3 and 4 of Table 2) regarding the various dimensions
of the accountability regime. Some of these ideas could
have resulted in an accountability regime more attentive
to social or developmental issues in SWF home countries
or regions and/or public concerns in recipient countries.
Others could have led to the SWFs becoming important
actors in addressing global developmental issues (e.g. the
World Bank’s proposal for SWFs to invest 1% of their capi-
tal in Africa). Some could have led to a more signi?cant role
for state-led regulation, and others would have led to pub-
lic disclosure aimed at enabling debates about the SWFs
and their role, in the SWF countries. This study shows
how the aligned interests of the UST and SWFs to maintain
unhindered SWF capital ?ows, the disproportionate repre-
sentation of ?nance of?cials in the negotiation process and
the greater power and capability of SWFs led to the
marginalization of all such alternative immanent ideas
for accountability. As a result, the regime diverged from
its other possible roles of holding SWFs to account
vis-a-vis western and SWF publics.
There have been several calls for re?ections on con-
temporary accountability structures and to propose alter-
natives to the dominant forms of hierarchical,
power-laden, transparency-based accountability regimes
which mostly rely on calculative and economized
accounts of targets (Kamuf, 2007; McKernan & McPhail,
2012). This study responds to such calls by exploring
the processes through which alternative ideas about each
aspect of the accountability regime emerge in the GAPP
negotiations process and how these ideas are margina-
lised. Attention to immanent ideas helps re?ect on the
‘‘possibilities of accountability’’ (Roberts, 1991) that are
tamed due to the dominant ideologies and power struc-
tures in global governance arenas and helps better under-
stand the institutional setting and collective agencies that
lead to the dominance of one idea of accountability at the
expense of others.
Resorting to transparency and resistance to transparency
Since the 1990s and the transnational regulatory
response to the Mexican and Asian Crises, transparency
based on ?nancial accounting and audit ideals have been
central to all major transnational regulatory regimes
(Rodan, 2002). In the case of the Asian Crisis, the standards
of disclosure and the evaluation regime were set by the
IMF and the World Bank relying on transparency for
achieving compliance through the disciplining force of
the ?nancial markets (Arnold, 2012; Best, 2005). This case
illustrates a much more expansive role for transparency
compared to the regulatory response to the Asian Crisis.
The process leading to the enactment of the GAPP demon-
strates how the standards, surveillance and compliance
pillars of the new ?nancial architecture were challenged.
(Wade, 2007). Speci?c international accounting, audit
and risk management standards and compliance/evalua-
tion processes were excluded from the code and replaced
by transparency pressures.
However, this falling back on transparency was also
contentious, as the notion meant different things to dif-
ferent accountability targets and faced various pushbacks
depending on national context and their desired and
undesired imagined ‘‘publics’’ for their public disclosure
(summarised in Table 3). The case shows the importance
of perceiving transparency from the vantage point of
32 A. Mehrpouya / Accounting, Organizations and Society 44 (2015) 15–36
transnational accountability regime targets. Understanding
their perspectives on norms such as transparency is espe-
cially important because of the increased power and
voice of such actors in global governance arenas. This
contributes to the debates surrounding the receiving side
of accountability regimes (Halliday & Carruthers, 2009;
Neu et al., 2006) and how accountability targets react
to transparency – the core tenet of such regimes
(Arnold, 2009b).
Who or what drives transnational accountability regimes?
In this paper, I attempted to deconstruct the ‘‘global’’
by looking into the detailed processes of co-optation
and coalition-building that drive the institution of a
transnational accountability regime. The case shows that
in attempting to understand the drivers and dynamics
of global accountability regimes, the traditional periph-
eral vs. core state or western vs. non-western divides
fail to have much analytical value when studying the
emerging multi-polar transnational governance context.
Rather, attention to communities and coalitions that
transcend local/global and central/peripheral boundaries
seems to be crucial to understanding the emergence of
such regimes. This further con?rms Halliday and
Carruthers’ (2009) claims about the importance of going
beyond typical fault lines in studies of global gover-
nance, and the necessity of paying attention to con?ict-
ing and competing agendas among or inside both
powerful western nations and the targets of such
accountability regimes.
Recent studies of regulatory emergence at the national
level have shown cases where a coalition of unlikely actors
is formed and how their interests are temporarily aligned
through different types of mediation, leading to the emer-
gence of a national regulatory regime (Djelic, 2013; Yandle,
1983; Yandle & Buck, 2002). This case illustrates how
ephemeral coalitions of unlikely actors with aligned inter-
ests and ideologies dispersed across divergent cultures and
geographies can organise themselves to drive transna-
tional accountability regimes. As shown, in studying such
coalitions, analyses should not only go beyond de?nitions
such as core/periphery and western/non-western, but
should also delve into the multiplicity of voices inside
one state. This is demonstrated, for example, through the
differences between the priorities of both the US
House/Senate committees and the UST. Attention should
be paid to which of these national voices are present at
the international level and what the implications of that
partial representation and actor mismatch are for transna-
tional accountability regimes.
In the increasingly multipolar and ?uid world of
transnational governance steered by alliances and coali-
tions, centres of power are negotiated and ?uid and bound-
aries between transnational core and peripheral actors are
mobile and porous (Djelic & Quack, 2010). More studies are
needed to better understand the processes for alliance for-
mation around shared interests and ideologies, and how
coalitions and counter-coalitions that transcend national
and cultural boundaries in?uence transnational account-
ability regimes.
Appendix A. List of interviewees
Organisation Position held at
the time of
GAPP
negotiations
Role in the
GAPP
negotiations
The OECD Senior Economist Observer
Temasek
(Singapore)
Director of
Global Strategy
Active
participant
Norwegian
Ministry
of Finance
Director
General in the
Ministry of
Finance Asset
Management
Department
(Former) –
responsible for
supervising
the Nowegian
SWF (GPFG)
Active
participant
Norwegian
Ministry
of Finance
Investment
Director
Active
participant
Norwegian
Ministry
of Finance
Director
General in the
Ministry of
Finance Asset
Management
Department
(current) –
responsible for
supervising
the Nowegian
SWF (GPFG)
Has taken
over the
overall
supervision
of GPFG
since 2011
New Zealand
Superannuation
Fund
Chief Executive Active
participant
Ministry of
Finance –
Alberta,
Canada
Assistant
Deputy
Active
participant
International
Monetary
Fund
Senior
Economist
Active
participant,
present in
the ?rst two
sessions
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doc_141251805.pdf
This paper analyses the development of a transnational accountability regime, – the
Generally Accepted Principles and Practices (GAPP), introduced in 2008 for sovereign wealth
funds. Facilitated by the International Monetary Fund, the regime aimed to improve the
transparency, governance and accountability of these government-owned investment funds
that originate primarily from the Middle East and Asia. I focus here on the struggles leading
to the establishment of the boundaries of the GAPP accountability regime by diagnosing the
accountability problem, determining the providers and the imagined users of the accounts
and defining the appropriate course of action. I then analyse the struggles involved in negotiating
the process and technologies used to establish the accountability relationship including
the role of standards in accounting, audit and risk management, as well as transparency
and compliance pressures. In each case I identify the different ideas or templates that
emerged during the negotiations and how consensus was achieved through careful steering
by a core coalition comprising the US Treasury and the largest, most legitimate funds. I highlight
the need to go beyond typical fault lines in debates surrounding the origins of global
governance regimes (e.g. local vs. global, western vs. non-western, core vs. peripheral) by
focusing on emerging coalitions of local/global and western/non-western actors that
increasingly drive such regimes.
Instituting a transnational accountability regime: The case
of Sovereign Wealth Funds and ‘‘GAPP’’
q
Afshin Mehrpouya
Accounting and Management Control Department, HEC Paris, 1 rue de la Libération, 78351 Jouy en Josas, France
a r t i c l e i n f o
Article history:
Available online 10 June 2015
a b s t r a c t
This paper analyses the development of a transnational accountability regime, – the
Generally Accepted Principles and Practices (GAPP), introduced in 2008 for sovereign wealth
funds. Facilitated by the International Monetary Fund, the regime aimed to improve the
transparency, governance and accountability of these government-owned investment funds
that originate primarily from the Middle East and Asia. I focus here on the struggles leading
to the establishment of the boundaries of the GAPP accountability regime by diagnosing the
accountability problem, determining the providers and the imagined users of the accounts
and de?ning the appropriate course of action. I then analyse the struggles involved in nego-
tiating the process and technologies used to establish the accountability relationship includ-
ing the role of standards in accounting, audit and risk management, as well as transparency
and compliance pressures. In each case I identify the different ideas or templates that
emerged during the negotiations and howconsensus was achieved through careful steering
by a core coalition comprising the US Treasury and the largest, most legitimate funds. I high-
light the need to go beyond typical fault lines in debates surrounding the origins of global
governance regimes (e.g. local vs. global, western vs. non-western, core vs. peripheral) by
focusing on emerging coalitions of local/global and western/non-western actors that
increasingly drive such regimes. I showhowthe disproportionate representation of ?nancial
actors in such coalitions leads to less attention to questions of public accountability, and
instead focusing such regimes on ?nancial accountability. I further elaborate on the impli-
cations of the fall-back to transparency in transnational accountability regimes as a last
resort and the types of resistance emerging against it.
Ó 2015 Elsevier Ltd. All rights reserved.
Introduction
Sovereign Wealth Funds (SWFs) are principally Middle
Eastern or Asian state-owned funds that invest in
international capital markets. Further to recent oil price
hikes and widening trade imbalances between Asian
economies and the US, SWFs have rapidly grown to
become in?uential actors in global capital markets. With
an estimated cumulative size of 5.6 trillion USD, they
now surpass the combined ?nancial value of hedge funds
and private equity (TheCityUK, 2013). Repeatedly involved
in large-scale, visible transactions in the US and Europe
since the 2007–2008 Global Financial Crisis, they have
been frequently criticised by western governments and
media for their lack of transparency and the potential
political motives behind their investment decisions
(Cohen, 2009; Truman, 2008). In response to suchhttp://dx.doi.org/10.1016/j.aos.2015.05.001
0361-3682/Ó 2015 Elsevier Ltd. All rights reserved.
q
I would like to thank the editor, David Cooper and two anonymous
reviewers for their rich and constructive comments and suggestions. I
further thank Diane-Laure Arjalies, Sebastian Becker, Imran Chowdhury,
Marie-Laure Djelic, Isabelle Huault, Philippe Lorino, Daniel Martinez,
Andrea Mennicken, Nicolas Mottis, Mike Power, Sigrid Quack, Rita
Samiolo, Keith Robson, Prem Sikka, and participants in presentations of
different versions of this paper at various conferences and seminars for
their generous comments. All remaining errors and weaknesses are mine.
E-mail address: [email protected]
Accounting, Organizations and Society 44 (2015) 15–36
Contents lists available at ScienceDirect
Accounting, Organizations and Society
j our nal homepage: www. el sevi er. com/ l ocat e/ aos
concerns, the International Monetary Fund (IMF) facili-
tated four months of formal negotiations leading to the
release of a voluntary code, the Generally Accepted
Principles and Practices (GAPP),
1
in October 2008. The pre-
sent study focuses on the process that led to the enactment
of this particular transnational governance regime which
aimed to improve the accountability, governance and trans-
parency of SWFs.
The case of GAPP is part of the broader restructuring of
transnational governance that has occurred over the past
20 years away from the states and towards a fast expand-
ing constellation of competing and complementing
transnational governance actors, processes and technolo-
gies (Braithwaite, 2008; Djelic & Sahlin-Andersson, 2006;
Levi-Faur, 2005). In the absence of coercive apparatuses
of nation states in the transnational space, rituals of
account giving and veri?cation have been central to this
transformation (Power, 1999). Transparency and account-
ability have been two crucial catchwords and structuring
norms underlying this explosion of new transnational gov-
ernance modalities (Garsten & Bostrom, 2008; Garsten &
De Montoya, 2008).
Negotiations leading to the enactment of a transna-
tional governance regime are fraught with tensions sur-
rounding the de?nition of the accountability problem, the
targets of the regime to be ‘‘held to account’’, the imagined
users of the accounts and the accountability actions to be
taken to address the problem (Garsten & Bostrom, 2008;
Grant & Keohane, 2005; Roberts & Scapens, 1985; Young,
1994). Such power-laden regimes of ‘‘hierarchical account-
ability’’ (Roberts, 1991) place different levels of emphasis
on the formulation of best practice norms, such as stan-
dards and soft laws as bases for judgment; transparency/-
surveillance pressures aimed at production of accounts of
the targets; and compliance pressures based on a combina-
tion of normative, mimetic and coercive mechanisms to
intervene in their targets (Garsten & Bostrom, 2008;
Roberts, 2009).
In the ?nancial sector, following the Asian Crisis and the
Global Financial Crisis, such ‘‘standards, surveillance and
compliance’’ regimes (Wade, 2007), have been fast institu-
tionalizing and expanding around the world through active
push by the IMF, the World Bank and the Financial Stability
Forum/Board (Arnold, 2012; Humphrey, Loft, & Woods,
2009). Accounting as the key technology of visibility
and audit as a crucial ritual of veri?cation lie at the
centre of this ‘‘transnational re-regulation’’ (Djelic &
Sahlin-Andersson, 2006, p. 12) of global ?nancial markets
(Arnold, 2009b, 2012). However, too little is known about
the political processes and institutional contexts in which
such regimes are enacted (Arnold, 2009b; Hopwood,
2009, p. 892). This knowledge is essential if we are to
achieve a better understanding of the rapidly-changing
political economy of accounting and accountability
(Arnold, 2012; Cooper & Sherer, 1984).
Drawing on a wide range of sources including inter-
views, diplomatic cables, participant observation,
publicly-available reports and secondary literature, I aim
to address this gap by unbundling the processes leading
to the institution of the GAPP accountability regime. I anal-
yse the competing perspectives of different actors on each
dimension of the GAPP, and the process through which
those immanent ideas were marginalized and how one
particular template emphasising the freedom of capital
?ows and transparency came to de?ne the ?nal code.
This study aims to make three contributions to the
scholarship on the political economy of accounting and
accountability. Firstly, despite the fast-expanding scholar-
ship about the role of transparency, account giving and
audit in global governance regimes (Arnold, 2012; Arnold
& Sikka, 2001; Garsten & Bostrom, 2008; Humphrey
et al., 2009; Neu, Ocampo Gomez, Graham, & Heincke,
2006; Neu, Rahaman, Everett, & Akindayomi, 2010;
Wade, 2007, 2010), very few studies have unbundled the
‘‘global’’ and laid out the detailed contentious processes
through which such regimes are institutionalized
(Halliday & Carruthers, 2009). In this study I draw upon
the accountability literature (Butler, 2005; Garsten &
Bostrom, 2008; Hoskin, 1996; McKernan & McPhail,
2012; Messner, 2009; Roberts, 1991; Roberts, 2009;
Roberts & Scapens, 1985; Woolgar & Neyland, 2013) to
analyse the processes leading to the institution of the
GAPP. This study shows the importance of unbundling
such processes and exploring the agencies, discourses
and institutional settings that lead to the emergence of a
dominant template at the expense of all other immanent
ideas of accountability. Attention to how alternative
immanent ideas of accountability are marginalised is cru-
cial to understanding how contemporary global gover-
nance regimes are constituted and maintained. Such
understanding contributes to on-going re?ections on
transnational ‘‘accounterability’’ (Kamuf, 2007; McKernan
& McPhail, 2012), i.e., alternatives to dominant calculative,
?nancialised and hierarchical transnational accountability
regimes.
This paper also contributes towards understanding the
political economy of transparency, a notion that has
emerged as a powerful norm in global governance, provid-
ing the normative foundations for the diffusion of ?nancial
accounting and audit (Arnold, 2009a, 2009b; Arnold, 2012;
Humphrey et al., 2009). In doing this it responds to recent
calls by accounting scholars to study ‘‘the ideological roots
of the notion of ‘‘transparency’’ and the role it is expected
to play in governing today’s extraordinarily complex and
volatile ?nancial system.’’ (Arnold, 2009a, p. 807). In this
respect, it provides a comprehensive analysis of the condi-
tions that led to transparency moving to the fore in this
transnational accountability regime, as a panacea and a
last resort. It then explores the different types of challenges
that transparency pressures faced from different account-
ability targets depending on their national information
practices and institutional context. This helps address an
important lacuna in current knowledge about the experi-
ence and perspectives of the receiving side of the global
accountability regimes (Halliday & Carruthers, 2009; Neu
et al., 2010) that face powerful world society norms such
as transparency. Studying the experience and perspectives
of the receiving side regarding transparency is especially
important at this time, given the greater power and
1
The GAPP can be found athttp://www.iwg-swf.org/pubs/gapplist.htm
16 A. Mehrpouya / Accounting, Organizations and Society 44 (2015) 15–36
capability of several historically-weak non-western coun-
tries (as this case shows) and their increased voice in glo-
bal governance arenas.
The third contribution of this paper is to the debates
surrounding the agentic and structural drivers behind the
emergence of new transnational governance regimes both
in accounting (Arnold, 2012; Arnold & Sikka, 2001; Neu
et al., 2006; Power, 2009) and elsewhere in political
sciences and sociology of law (see Halliday & Osinsky,
2006 for a summary). There have been recent calls to go
beyond the entrenched globalist, sceptic, postcolonial,
world society and world systems views of transnational
governance regimes and to instead deconstruct the ‘‘glo-
bal’’ by paying attention to the processes through which
standards, codes and soft laws are enacted and consensus
is achieved (Halliday & Carruthers, 2009; Halliday &
Osinsky, 2006). This study shows that there is an analytical
need to move beyond traditional core vs. periphery and
globalisation vs. state frontiers by focusing instead on the
communities and ‘‘coalitions of the unlikely’’ (Djelic,
2013) transcending these fault lines that come together
around shared interests and ideologies and drive the insti-
tution of contemporary global governance regimes.
Finally, this study brings to the fore in the accounting
literature a mostly underexplored category of transna-
tional actors that is the Sovereign Wealth Funds, with sig-
ni?cant power in the global ?nancial markets and with
unique attributes such as being state/market hybrids orig-
inating mostly from non-Western countries.
In the following section, I introduce the literatures on
global governance and accountability as relevant to the
study of this empirical case. Next, I describe the data
sources used for the study. I then provide an introduction
to the recent history of SWFs and the GAPP process, fol-
lowed by a detailed analysis of the struggles involved in
enacting the accountability regime. In the ?nal section, I
elaborate on the implications of this study for the litera-
ture on the political economy of accountability and global
governance.
Globalisation and transnational accountability
Accountability involves the discourse and practices of
demanding the production of an account of self (Butler,
2005; Roberts, 1991), which constitutes a cornerstone of
the liberal forms of governing. It refers to ‘‘the ways in
which actions are organized: that is, put together as pub-
licly observable, reportable occurrences’’ (Button &
Sharrock, 1998, p. 74). The fast expansion of the global ‘‘ac-
countability movement’’ (Meyer, 2008, p. 250) and govern-
ing through rituals of norm-setting, account giving and
veri?cation has led to the emergence of ‘‘an accountability
industry of standards setters, regulatory agencies and
inspection regimes’’ (Garsten & Bostrom, 2008, p. 1). This
has resulted in a new organising and governing paradigm
– the ‘‘audit society’’ (Power, 1999).
In this paper, an accountability regime refers to a con-
stellation of actors, technologies, discourses and processes
organised with the goal of in?uencing the accountability
targets’ ways of being and doing through rituals of account
production and visibility (Meyer, 2008; Roberts, 1991;
Roberts & Scapens, 1985).
2
Instituting an accountability
regime depends on contested and power-laden processes
to establish its boundaries. These boundaries include the
accountability problem and action, and the users and provi-
ders of accounts (Garsten & Bostrom, 2008; Woolgar &
Neyland, 2013). The ‘‘appropriate’’ accountability problem
(Young, 1994) is de?ned through ‘‘diagnostic struggles’’
(Halliday & Carruthers, 2009, p.17) or the process of prob-
lematisation (Messner, 2009). In this process, the idea of
inef?cient, opaque, unreliable or corrupt categories of indi-
viduals or organisations has to be established as the basis
for the need to hold them to account. The accountability
problem and the ‘‘appropriate action’’ or ‘‘prognostic strug-
gles’’ (Halliday & Carruthers, 2009) to address the con-
structed problem co-constitute each other (Young, 1994).
Typical fault lines for action in transnational governance
are transnational/national, soft/hard, multilateral/bilateral
or self-governance regimes for accountability targets
(Halliday & Carruthers, 2009). In the process of setting a
regime’s boundaries – besides settling the appropriate prob-
lem and the action – key questions of who is to be made
accountable and who the users/bene?ciaries of the accounts
are, need to be addressed (Grant & Keohane, 2005; Young,
2006). The targets of an accountability regime have to be
‘‘recognized on the other’s terms’’ (Roberts, 2009, p. 959),
categorised and territorialised before they can be targeted
for intervention (Miller & Power, 2013). Such categories
and classi?cations are frequently contested, mobile, porous
and ‘‘morally and legally consequential’’ (Woolgar &
Neyland, 2013, p.75). As for the bene?ciaries and users of
the accounts, different actors push for different de?nitions
for the imagined users of an accountability regime depend-
ing on their normative preferences, interests and preferred
course of accountability action. These imagined users fre-
quently have limited or no voice in the process (Young,
2006).
Within and mutually constituting the boundaries of the
accountability regime, struggles around the ‘‘how’’ of the
regime take place, i.e., determining the technologies and
processes to be used to establish the ‘‘accountability rela-
tionship’’ between the imagined users of the accounts
and the targets of the regime. A key contested question
in this area is what standards of ‘‘ideal self’’ should be used
as the basis to judge targets (Hoskin, 1996). In certain
regimes (e.g. the Financial Stability Forum following the
2
Scholars in accounting and accountability have used several concepts
such as ‘‘ensemble’’ (Miller, 1998), ‘‘constellation’’ (Burchell, Clubb, &
Hopwood, 1985), ‘‘system’’ (Roberts & Scapens, 1985), ‘‘assemblage’’
(Miller, 1998) and ‘‘complex’’ (Miller & Power, 2013) to refer to the
collective role of the actors, discourses, technologies and processes that
make account-based governance possible. In this paper, drawing upon
Meyer (2008), I use the term ‘‘transnational accountability regime’’. This is
because other concepts such as constellation and assemblage frequently
have a broader longitudinal and spatial (or at times vaguely-de?ned) scale
and scope. The GAPP regime, while part of the broader transnational
governance constellation/assemblage, refers to a speci?c case within
speci?c temporal and spatial con?nes. In addition, the concept of regime
(Uddin & Hopper, 2001) and ‘‘regimes of control’’ (Burawoy, 1983) as
mobilised in accounting literature and elsewhere has a stronger agentic
dimension, closer to the GAPP case where a coalition of actors and their
collective agency are crucial to its process and outcome.
A. Mehrpouya / Accounting, Organizations and Society 44 (2015) 15–36 17
Asian Crisis), the standards as bases for judgment are
clearly de?ned and demanded (Arnold, 2012). In some
other regimes only transparency
3
and account production
are demanded, assuming that the dominant discourses in
the ?eld which establish ideas of superior and inferior ways
of being and doing will transform the accounts and mea-
sures of targets into bases for judgment (Hoskin, 1996;
Roberts, 2009).
4
As for the process of intervening in targets
to shape them in the image of the ideal self, contemporary
regimes of ‘‘hierarchical accountability’’ (Roberts, 1991)
increasingly rely on transparency as a governance panacea
in pushing for the production of publicly available accounts
of targets (Arnold, 2009a, 2009b; Roberts, 2009). Such
accounts are then integrated in accountability technologies
such as public reports, rankings, certi?cations, signatory lists
and league tables that help establish the targets as superior
or inferior when compared to each other and/or to the stan-
dards of the ideal self. Such technologies of normative order-
ing and moralisation of accounts (Fourcade & Healy, 2007)
are founded on notions of recognition, shame or guilt
(Roberts, 2009) and aim at the subjectivisation of the
accountability regime’s ideals by its targets, leading to
self-governing (Roberts, 2009). Accounts can also be
employed as a basis for more coercive forms of intervention
in the targets – such as IMF and World Bank’s ‘‘structural
adjustment programmes’’ in emerging economies, backed
by the coercive power of their conditional loans (Neu
et al., 2010). These contested dimensions of an accountabil-
ity regime are summarised in the ?rst two columns of
Table 2 in the discussion section.
When enacting transnational accountability regimes,
settling each of the above dimensions involves struggles
between concerned actors with a stake in the process,
who frequently include the targets of the regime, interna-
tional organisations, states, investors, professional bodies
and accounting and audit ?rms (Halliday & Carruthers,
2009). The fragile and contested nature of the political
arrangements leading to the institution of accountability
regimes lead to a state where all aspects of accountability
are constantly formulated and reformulated and where
actors continue their in?nite run on the ‘‘treadmill of
accountability’’ (Garsten & Bostrom, 2008, p. 242).
In the ?nancial sector, the Asian Crisis and the Global
Financial Crisis played signi?cant roles in driving the
emergence of hierarchical transnational accountability
regimes with standards and transparency pressures at
the core. The Asian Crisis led to a shift in the policies of
the IMF and the World Bank from the idea of ‘‘liberalised
markets’’ towards the ideal of ‘‘standardised markets’’.
This was based on the rapid expansion of international
accounting, audit, risk management and governance stan-
dards, with transparency as the key driver for
market-driven compliance (Arnold, 2012; Wade, 2010, p.
158). The IMF and the World Bank sought to address the
established diagnosis of ‘‘crony capitalism’’ in affected
Asian countries by introducing a set of transparency pres-
sures based on international ?nancial and audit standards
for ?rms, ?scal transparency for states and standardised
statistics for economies (Arnold, 2012). The IMF and the
World Bank began to publicly disclose annual country
Reports on the Observance of Standards and Codes
(ROSC) for emerging economies, with the objective of
achieving compliance through the disciplining force of
?nancial markets. The IMF’s Managing Director,
Camdessus (1999), talked about transparency as the
‘‘golden rule’’, describing it as ‘‘absolutely central to the
task of civilising globalisation’’.
The global ?nancial crisis has further reinforced this
model. The appearance of emerging economies such as
China, India, Brazil and South Africa, along with the G20
as a key platform for global agenda setting, has resulted
in a situation where the standards, surveillance and com-
pliance regime is to be applied on a global basis and ‘‘not
just for emerging and developing economies’’ (Humphrey
& Loft, 2009, p. 812). The Financial Stability Board, the
IMF and the World Bank now oversee peer reviews aimed
at pushing for compliance with accounting, audit, ?scal
transparency and national statistics standards – not only
in emerging markets but also in the west (Humphrey
et al., 2009).
For scholars studying the emergence of global account-
ability regimes both in the ?nancial sector and elsewhere,
a key question has been the role that national, global, eco-
nomic, cultural and institutional factors play in driving and
de?ning such transnational regimes. Scholars in
hyper-globalist, world society/polity, world systems and
post-colonial traditions have attempted to answer this
question each with different theoretical presuppositions
and conclusions about what drives global governance (for
a review of these different research traditions see
Halliday & Osinsky, 2006). Typical fault lines in the
debates between these traditions include local vs. global,
state vs. globalisation and core vs. peripheral nations.
Hyper-globalists (Fukuyama, 2006; Ohmae, 1995), for
example, consider the state as increasingly irrelevant in
global governance regimes and perceive globalisation as a
liberating, modernising and unstoppable force that dis-
arms it. Conversely, ‘‘sceptic’’ scholars focus on the contin-
ued relevance of state actors in steering global governing
regimes (Zevin, 1992). World systems theorists (Hopkins
& Wallerstein, 1982) focus on the hegemonic power of core
nations and actors over peripheral nations, maintained
through the control of global governing resources and
infrastructures. Post-colonialist scholars (De Sousa
Santos, 2002) emphasise the role of dominant discourses
and norms in the emergence of such regimes and in main-
taining the cultural hegemony of western nations over
weaker nations. They primarily discuss the consequences
of such regimes for weaker nations. World society/polity
theorists (Meyer, Boli, Thomas, & Ramirez, 1997) focus on
the role of world society norms in driving the diffusion of
western-dominated models of governing towards increas-
ing isomorphism. ‘‘Varieties of capitalism’’ scholars (Hall &
Soskice, 2001) emphasise national varieties and the
3
Transparency as used in this paper implies demanding of/providing
unhindered access to information about ones’ ways of being and/or doing
to the public (Garsten & De Montoya, 2008; Hood & Heald, 2006).
4
According to Hoskin (1996 p.266), ‘‘there was never an idyllic moment
when measures of human performance existed purely as measures, neutral
and dispassionate. When measures become targets, ‘ought’ and ‘is’ are
con?ated and description and prescription bound together in ‘constant
mutual implication’.’’
18 A. Mehrpouya / Accounting, Organizations and Society 44 (2015) 15–36
sustenance of national differences in the face of globalisa-
tion pressures.
In the accounting ?eld, studies of the emergence of
transnational accounting and accountability regimes also
tend to fall along these fault lines, with some emphasising
the continued importance of states in driving such regimes
(Arnold & Sikka, 2001) and others accentuating the impor-
tance of world society norms of accounting in driving glo-
bal accounting templates (Power, 2009). Some works have
focused on the role of hegemonic actors such as the US, the
IMF or the Big Four (or Five) (Arnold, 2012; Caramanis,
2002) in the enactment and implementation of transna-
tional codes and accounting standards. Others highlight
the experience of the receiving side of accounting and
audit regimes by exploring the role of the constellation of
discourses, technologies and knowledge forms that
western-dominated international organisations use to
intervene in weaker nations (Neu, 1999; Neu et al., 2006,
2010).
In their recent seminal work on the global enactment
and implementation of bankruptcy law, Halliday and
Carruthers (2009) highlight key gaps in all these research
traditions regarding the origins of and conditions for the
emergence of such transnational regimes. They advocate
that these traditions advance on the basis of a ‘‘rei?ed
and unitary concept of the global’’ (Ibid, p. 6). They empha-
sise that while these traditions capture the con?ict
between central powers and peripheral players (with bat-
tles invariably being won by the centre), the ‘‘battle within
global centres over whose law regulates global markets
gets overlooked’’ (Ibid, p. 6). The authors also indicate that
research on the emergence of global governing regimes has
mostly ignored how ‘‘nation states in disadvantageous
positions within the global balance of power are neverthe-
less able to resist and adapt to global forces and we must
explain the conditions under which such resistance is
possible’’ (Ibid, p. 25). They emphasise the need to study
the increasingly diffused distribution of power in global
governance by analysing the material and symbolic power
of different national actors and their cultural/social
distance from the arenas of transnational governing. As
they show in the case of bankruptcy law enactment and
implementation, weaker national actors in terms of
material power can at times disproportionately in?uence
global governance regimes given their low cultural/social
distance from global governing cultures and networks. In
other words, they are ‘‘closely integrated with global insti-
tutions through revolving personnel, policy in?uence, and
concordance of ideology and practices’’ (Ibid, p. 294).
In their opinion, these lacunae have been reinforced
by the fact that ‘‘social scientists mostly lack access
to the councils of global norm making’’ (Ibid, p. 6). As a
result, ‘‘they either place undue reliance on of?cial
self-presentations and are thus caught by projected
self-images or they rely on rei?ed concepts that owe more
to theoretical deduction than empirical induction’’.
According to the scholars, ‘‘too little theory’’ speci?es
‘‘the conditions under which global consensus on norms
will be possible’’ (Ibid, p. 6).
In an attempt to address the key gaps highlighted
by Halliday and Carruthers (2009), I endeavour to go
beyond the theoretical presuppositions of hyper-
globalists, sceptics, world society/polity, world systems
and post-colonial theories by instead focusing on the
arena, actors, power, processes and laws, texts and tech-
nologies involved in the development of the GAPP. In this
process, I focus on the types of contention and con?icting
views of the different national and international actors
involved and the process through which a consensus
around the norms was achieved. To study how consensus
around the GAPP was achieved, and drawing upon the
accountability literature, I focus on the struggles involved
in settling each of the key dimensions of this accountability
regime. I pay attention to the differences in the views and
accountability objectives of national legislative bodies and
publics in SWF countries, the US and Europe, SWF heads,
western ?nance of?cials and SWF ?nance of?cials repre-
sented in the transnational negotiation processes. By
focusing on the political economy of accountability, this
study seeks to further demystify the crucial role trans-
parency as a governance panacea and powerful world
society norm (Arnold, 2009b; Garsten & De Montoya,
2008) has come to play in structuring contemporary
transnational accountability regimes.
Data sources
This study covers the GAPP negotiations from early
2007 when the US Treasury (UST) began informal bilateral
negotiations with key concerned actors to the formal
negotiations facilitated by the IMF in 2008, leading to the
release of the GAPP in October 2008. Studies of the
enactment of transnational accountability regimes are
frequently hampered by the dif?culty of access to arenas
of global governance (Halliday & Carruthers, 2009). For
the purpose of this study, I was able to access a wide range
of empirical material that provided a unique perspective
on the processes leading to and following the enactment
of the GAPP accountability regime:
SWFs, IMF, World Bank, Organisation for Economic
Cooperation and Development (OECD), UST, US
Congress websites, press releases, reports and discus-
sion papers on SWFs and the GAPP: I used these sources
to study public debates on SWFs, the of?cial position of
actors with regard to the GAPP accountability regime,
and the key events leading to its institution.
98 diplomatic cables related to meetings between the
UST and European and SWF country of?cials published
by Wikileaks (referred to as USMFA_City in the paper).
Diplomatic cables, issued by the US mission in the coun-
try where each meeting is held, are detailed accounts of
these meetings and include a context description,
quotes and analyses. These reports span mid-2007 to
the end of 2008 and provide details on the role of the
UST in preparing the grounds for the GAPP. They also
afford an exceptional level of access to the unof?cial
views of recipient and SWF country of?cials.
Eight interviews: Six with SWF representatives (?ve of
whom were involved in the GAPP process), one with
an IMF senior economist present at two of the three
A. Mehrpouya / Accounting, Organizations and Society 44 (2015) 15–36 19
formal GAPP meetings and one with an OECD represen-
tative in the GAPP process. Interviews lasted on average
60 min. Three were conducted in person and the
remainder by phone (a list of the interviewees is pro-
vided in Appendix 1). These interviews provided details
on the formal GAPP negotiations and how the GAPP text
evolved.
Participant observation: From mid-2007 to June 2009, I
led a research team on the governance and voting prac-
tices of SWFs and their compliance with the GAPP. The
resulting report was released on the anniversary of
GAPP in October 2009 (Riskmetrics, 2009). In this pro-
cess, I (along with the analyst team) interviewed SWF
of?cials from Singapore, Libya, Australia, Canada and
Norway. This provided contacts and contextual infor-
mation that were useful for this research project.
I also relied on a wide range of reports and secondary
literature on SWFs (Balding, 2008; Butt, Shivdasani,
Stendevad, & Wyman, 2008; Chhaochharia & Laeven,
2008; Cohen, 2009; Epstein & Rose, 2009; Gelpern,
2011; Gilson & Milhaupt, 2008; Lyons, 2007; Monk,
2009; Murphy, 2012; Norton, 2010; Truman, 2008;
Truman, 2011).
‘‘Making up’’ sovereign wealth funds: And making them
transparent and accountable
The emergence and rapid proliferation of SWFs repre-
sents a shift from states investing surpluses in national
or regional projects to states investing in international
?nancial markets. Part of a broader trend of the ?nancial-
ization of the economic activities of states (Krippner,
2005; Wang, 2013), certain countries (e.g. in the Middle
East) justify this as necessary, given the lack of suf?cient
investment opportunities in local economies (small size
of the economy versus the size of the fund). For other
SWFs, the of?cial purpose is to diversify away from or to
stabilise local economies in case of crises or volatility
(IMF, 2008b).
Oil-rich countries have a long history of sovereign
wealth funds – the Kuwait Investment Authority, for
instance, is over 60 years old (Riskmetrics, 2009). Recent
increases in the price of oil have led to rapid growth in for-
eign reserves of oil-rich countries. In addition to
well-established SWFs in countries such as Kuwait, Qatar,
the UAE and Norway, other oil-rich nations such as
Russia and Nigeria began establishing SWFs in the late
2000s.
5
(see Table 1).
Since the 1980s, the emergence of export-driven Asian
economies and trade imbalances, particularly with the
US, frequently combined with exchange rate controls, has
led to rapid foreign reserve accumulation in Asian econo-
mies such as China, Singapore, South Korea and Malaysia
part of which has been transferred to their respective
SWFs (ECB, 2006). SWFs from major export-oriented
economies include Temasek and GIC (Singapore), the
Chinese Investment Corporation (China) and Khazanah
(Malaysia) (Butt et al., 2008). Not all SWFs are ?nanced
by natural resources or trade imbalances. For example,
the Australian Future Fund, funded through privatisation,
seeks to ?nance future public pension liabilities.
SWFs have only become a recognised political issue for
western publics since the start of the Global Financial
Crisis in 2006. A number of factors have led to this
increased visibility:
The size of the SWFs has increased dramatically in the
past few years as a result of higher oil prices (Middle
Eastern SWFs) and widening trade surpluses for Asian
export-driven economies (China and Singapore). From
around 3 trillion USD in 2008, the cumulative size of
SWFs grew to approximately 5.6 trillion USD in 2013
(TheCityUK, 2013) and they are estimated to reach 9
trillion USD by 2020 (PWC, 2014).
SWFs have been involved in a few highly publicised and
controversial transactions. A prominent case was
Temasek’s purchase of the Thai telecommunications
company, Shin Corporation, owned by the family of
the then-prime minister of Thailand (Taksin). This case
was central to the ousting of Taksin in 2006
(Lhaopadchan, 2010). Another case, also in 2006, was
Dubai World’s purchase of the Peninsular and Oriental
Steam Navigation Company that would transfer the
ownership of six major seaports of the US to Dubai
World. The transaction was later annulled due to polit-
ical backlash in the US (Mostaghel, 2006). These two
cases were key references in the debates surrounding
SWF security concerns.
The Global Financial Crisis led to lack of liquidity in
western markets and a signi?cant decline in the value
of several western multinationals (MNC). This subse-
quently prompted signi?cant SWF investment in west-
ern ?nancial entities such as Barclays, Citigroup, UBS
and the London Stock Exchange (Balin, 2008).
A large number of SWFs were launched in the 2000s,
including Chinese, Australian, Nigerian, Russian and
Japanese funds. The total number now stands at 66
compared to 12 in 2000. In particular, the launch of
the Russian and Chinese funds was an important factor
leading to the additional politicisation of SWFs. While
China historically invested most of its foreign reserves
in US Treasury bills, the launch of CIC in 2007 repre-
sented a shift in the country’s reserve management
strategy away from the US economy towards more risky
and diverse assets (Murphy, 2012).
Addressing the International Monetary and Financial
Committee’s (IMFC)
6
annual meeting in October 2007, the
UST head, Henry Paulson, pitched the idea of voluntary sets
of best practices for SWFs and recipient countries to be
developed by the IMF and the OECD respectively (Norton,
5
Saudi Arabia has one of the world’s largest oil-based foreign reserves,
but has not launched a formal SWF and most its reserves have been
managed directly by its central bank (Saudi Arabian Monetary Agency)
(CFR, 2009), and as a result had only a permanent observer status in the
GAPP negotiations. In recent years, SAMA Foreign Holdings is frequently
considered a SWF.
6
The IMF’s supervision body created in 1999 and comprised of central
bankers and ?nance ministers.
20 A. Mehrpouya / Accounting, Organizations and Society 44 (2015) 15–36
Table 1
Overview of some of the largest SWFs actively involved in the GAPP negotiations. Source:http://www.sw?nstitute.org and respective SWF websites (as of April 2015) – For media concerns see Riskmetrics (2009),
Cohen (2009) and CRS (2008).
SWF Year founded Source of capital Approx. size Country Stated Mission Examples of Western media and regulatory
concerns – prior to GAPP
Kuwait Investment
Authority
1953 Oil 548 USD Billion Kuwait Providing an alternative to oil reserves
Transfer of wealth to future generations
Opacity – Public disclosure of fund infor-
mation forbidden by law
Abu Dhabi Investment
Authority
1976 Oil 773 United Arabic
Emirates
To make available the necessary ?nancial
resources to secure and maintain the
future welfare of the Emirate
Large size and low public disclosure
including lack of knowledge about its
size and exercise of shareholder rights
Temasek Holdings 1974 Privatization
Exports related
foreign reserves
177 Singapore Charter 2002: to develop economically
viable businesses, retain and create jobs,
and contribute to Singapore’s economic
survival, progress and prosperity
After 2009 – focus on long-term returns
Large holdings and possibility of strategic
in?uence in companies – with little dis-
closure in this regard
History of investments perceived as
politically motivated especially in Asia
Possibility of technology transfer from
portfolio companies
Government Investment
Corporation
1981 Exports related for-
eign reserves
320 Singapore Contribute to the well-being of current
and future generations of Singaporeans
Potential political motives behind
investments
Possibility of technology transfer from
portfolio companies
Norwegian Government
Pension Fund Global
1990 Oil 893 Norway Phasing the entry of oil revenues to the
Norwegian economy
Transfer of wealth to future generations
Qatar Investment Authority 2005 Oil 256 Qatar Strengthen the country’s economy by
diversifying into new asset classes
Opacity – Public disclosure of fund infor-
mation forbidden by law
Australian Future Fund 2006 Privatization 95 Australia Making a provision for unfunded Com-
monwealth superannuation liabilities
Chinese Investment
Corporation
2007 Exports related for-
eign reserves
652 China Diversify China’s foreign exchange
holdings
Potential political motives of investments
Possibility of use towards China’s indus-
trial policy – especially in natural
resource acquisition
Possibility of technology transfer from
portfolio companies
Russian National Wealth
Fund
2008 Oil 81 Russia Stabilization of economy in case of oil
price volatility
Potential political motives of investments
Possibility of fast withdrawal of funds
leading to market instability – given the
small size of the fund compared to the
size of the Russian economy – and its sta-
bilization role
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1
2010). This measure was later rati?ed by the IMFC (IMF,
2007).
Based on this mandate, the OECD launched in 2008
its standard-setting process by drawing on its existing
work on the Code of Liberalisation of Capital Movements
(OECD, 2013). The new Sovereign Wealth Funds
and Recipient Countries code was developed and
released at the same time as the GAPP. It emphasised
non-discrimination against SWFs (compared to other
investors), transparency on SWF investment restrictions
of OECD countries, ‘‘standstill’’ (i.e. not adding new restric-
tions for SWFs), and ‘‘unilateral liberalisation’’ (committing
OECD countries to be open to SWF capital even when SWF
countries were not open to foreign capital) (OECD, 2008b).
This process was crucial to ensuring the continued, unhin-
dered ?ow of SWF capital to western ?nancial markets.
For its part, the IMF facilitated the creation of a standing
body, the International Working Group of Sovereign
Wealth Funds (IWG-SWF), to develop a code aimed at
improving SWF transparency, accountability and risk
management (later renamed the GAPP or the Santiago
Principles). At the IMF, work on developing a ?rst draft of
the code began immediately in October 2007, formal
negotiations with SWFs started in June 2008 and the
GAPP was released publicly on October 8th 2008.
The following actors were involved in the negotiations
leading to the enactment of the GAPP by the IMF:
Recipient country representatives: Finance ministers and
of?cials from western countries were present as obser-
vers during the GAPP negotiations.
SWF countries: Representatives from the larger SWFs
and their respective governments were involved in the
informal preparatory work with the UST and actively
took part in the GAPP negotiation processes. The most
in?uential SWFs in terms of power and distance from
transnational governing processes and culture
(Halliday & Carruthers, 2009) were ADIA (UAE),
Temasek and GIC (Singapore), the CIC (China), GPFG
(Norway) and the Australian Future Fund. These funds
were in?uential given their size (ADIA, GIC, QIA, KIA,
GPFG), their powerful state owners (Russia and China)
or their legitimacy in the emerging SWF community
(Temasek, ADIA and GPFG – the latter being projected
as a model for SWF transparency by the IMF (IMF,
2008b)). Funds with low cultural/social distance
included those with large western or western-trained
teams (ADIA, the Norwegian, Australian and
Singaporean funds), with business, ?nance or legal
backgrounds.
International organisations: The IMF provided the secre-
tariat for the GAPP process, co-chaired the meetings and
delivered the GAPP template based on its existing
guidelines especially the Guidelines for Foreign
Exchange Reserve Management (IMF, 2001). The
World Bank and the OECD were observers in this
process.
US Treasury: The UST introduced the idea of a voluntary
code and played a pivotal role in coordinating the pro-
cess through bilateral meetings with involved nations
and organisations in 2007 and 2008. The US was
present both as an SWF country (through the Alaska
fund) and a recipient country.
Professional bodies and accounting ?rms: According to
the IMF, accounting and audit associations and ?rms
were consulted in preparation for the GAPP negotia-
tions (IMF, 2008b). Although accounting ?rms issued
position and discussion papers during the process
(Deloitte, 2008), they were not present at meetings
and were not cited by interviewees as crucial or visible
actors in the process.
Constituting the boundaries of the GAPP accountability
regime
Prior to the start of the formal IMF-facilitated negotia-
tions, through numerous bilateral meetings with both the
SWF and recipient countries, the UST played a key role in
de?ning the accountability problem of SWFs, the targets
of the GAPP regime, the users of the SWF accounts and
the type of action to be taken. This section details the
groundwork which led to setting the boundaries of the
GAPP regime.
What is the problem? Diagnostic struggles
A vast body of articles dedicated to the risks associated
with SWFs were published from 2006 to 2009 in US and
European media. Security issues raised included the risk
of transferring sensitive technologies of western multina-
tionals to oppressive or adversarial regimes and the danger
of western MNCs being exploited to achieve the industrial
or geopolitical objectives of SWF countries such as China
and Russia (Financial Times, 2008). Other issues included
the acquisition of privatised western infrastructure such
as airports, telecommunications or stock exchanges by
SWFs, which would amount to ‘‘cross-border nationaliza-
tion’’ (NYTimes, 2007a; TheStar, 2008). Exercising owner-
ship rights for political purposes through appointing
board members, proxy voting and coercion of portfolio
company managers by SWFs with concentrated holdings
and strategic investments (e.g. Temasek and QIA) were
other sources of concern (Riskmetrics, 2009). Nicolas
Sarkozy, referring to non-western SWFs as ‘‘predators’’
(Euractiv, 2008), exempli?ed the more populist rhetoric
surrounding the risk of SWFs at the time, which cate-
gorised all non-western SWFs as the feared ‘‘others’’.
7
Besides security concerns there were other problemati-
zations of the SWFs based on their effects on markets. Such
concerns included whether some SWFs could get advan-
tage over other investors by using their respective
7
Some countries had speci?c issues with certain SWFs in particular. For
example, Italian stock market regulators were concerned about the
purchase of major, under-priced Italian ?rms by the Libyan Investment
Authority, the SWF of the former colony of Italy (USMFA_Rome, 2008). In
the Netherlands, following the realisation that Barclay’s bid for ABN Amro
was backed by the Chinese Development Bank, the Dutch President
considered it ‘‘naive for the government to just stand by while extremely
wealthy funds shop for Dutch companies’’ (USMFA_Hague, 2007) and
started a consultation aimed at improving SWF investment regulation.
Germany had similar concerns about Russian state-owned banks and SWFs
(NewsWeekly, 2008).
22 A. Mehrpouya / Accounting, Organizations and Society 44 (2015) 15–36
governments’ access to intelligence. Several European
?nance ministers expressed unease over the systemic risks
of SWFs for European capital markets due to their size
(USMFA_Warsaw, 2008) and the relative ‘‘shallowness’’ of
European capital markets compared to the US.
In the US, the House Financial Services Committee and
the Senate Foreign Relations and Banking Committees held
several hearings in 2007 and 2008 on the security dimen-
sion of SWFs (CRS, 2008). The hearings stressed the
above-mentioned risks, yet focused primarily on Chinese
and Russian funds and their underlying political motives
(CRS, 2008).
At the transnational level, US and European efforts
regarding SWFs were spearheaded by their ?nance
ministers and treasuries. UST of?cials played a key
role in negotiating the terms of the diagnosis via meetings
with European countries and the EU (USMFA_Brussels,
2007; USMFA_London, 2008; USMFA_Paris, 2007;
USMFA_Rome, 2008; USMFA_Warsaw, 2008). Framing
SWFs as ‘‘patient, long-term and non-political’’
(USMFA_Brussels, 2007), the UST made it clear that the
goal of the accountability process was to ‘‘help diffuse
protectionist tensions, mitigate any systemic risk and
help guide countries that were setting up new SWFs’’
(USMFA_Singapore, 2007). UST of?cials raised similar
points in their meetings with the SWF countries. The
undersecretary for international affairs of the UST,
declared in a meeting with Kuwaiti of?cials
(USMFA_Kuwait, 2007b):
‘‘Perceptions differ from the facts and it is important to
educate people so they understand that there are no
risks. Otherwise, it may be dif?cult to counter the pro-
tectionist sentiments that are clearly on the rise in the
OECD countries and Asia, as evidenced by recent report-
ing in the ?nancial and popular press, as well as new
legislative initiatives. . . .development of a set of
voluntary, ?exible best practices for SWFs would help
manage these pressures . . . a similar effort for hedge
funds appeared to have quelled demands by European
of?cials for regulatory oversight of the hedge fund
industry.’’
8
This clearly shows that one of the UST’s central objec-
tives was to in?uence public perceptions about SWFs
and, as in the case of the voluntary code for hedge funds
in 2007, to allay regulation by national regulators, espe-
cially in Europe. Such statements also aimed to reassure
SWFs who frequently raised concerns about their unequal
treatment compared to hedge funds and private equity
?rms (USMFA_Beijing, 2008; USMFA_HongKong, 2007;
USMFA_Kuwait, 2008). The latter also had low levels of
disclosure yet were not subject to similar pressures.
SWFs faced signi?cantly more regulatory pressure from
European regulators compared to the US (Bloomberg,
2007) and in 2007 several European countries were consid-
ering introducing regulatory limits on SWF investments.
9
The SWFs needed an urgent solution to address the problem
of regulatory backlash from European countries and poten-
tially the US. In other words, UST concerns about the ‘‘pro-
tectionist sentiments in OECD countries’’ were consistent
with the SWFs’ fear of having their investments curbed.
The ?nal GAPP code highlights the following problem to be
addressed (IMF, 2008a):
‘‘Publication of the GAPP should help improve the
understanding of SWFs as economically and ?nancially-
oriented entities in both the home and recipient
countries. This understanding aims to contribute to
the stability of the global ?nancial system, reduce
protectionist pressures, and help maintain an open
and stable investment climate. The GAPP would also
enable SWFs, especially newly established ones, to
develop, review, or strengthen their organization,
policies, and investment practices.’’
This formulation, fundamentally based on
market-related concerns about SWFs, is close to the posi-
tions of the UST and SWFs. This contrasts sharply with
the Asian Crisis and the Financial Stability Forum’s formu-
lation of the accountability problem as ‘‘crony capitalism,
poor ?nancial governance, and a lack of transparency
within emerging economies’’ (Arnold, 2012, p. 365). Here,
SWFs are referred to as ‘‘economically and ?nancially ori-
ented’’ and the process simply aims to help ‘‘understand’’
them through transparency. However, as with the
response to the Asian Crisis, the UST remained steadfast
in resisting any constraints on global ?nancial integration
and capital ?ows. Indeed, the power of SWF countries,
the UST’s focus on freedom of capital ?ows and market sta-
bility, and the voicelessness of western legislative bodies at
the transnational level led to excluding most of public/leg-
islative bodies’ concerns from the statement of the
problem.
Making whom accountable? De?ning the sovereign wealth
funds
The term ‘‘sovereign wealth fund’’ was ?rst used in an
article by an economist in 2005 (Rozanov, 2005). Given
the diverse missions, histories and structures of these
funds, the process of grouping all government-owned
funds under the SWF category was deemed to entail com-
mensuration pressures by the UST or the IMF and resis-
tance by funds.
According to a diplomatic cable related to a meeting
between UST of?cials and the Polish ?nance minister, the
latter emphasized that several European governments
8
This quote refers to the development of a voluntary code for improving
the transparency of hedge funds in 2007–2008 (NYTimes, 2007b). The issue
of hedge fund opacity was important especially to Asian economies since
they considered greater disclosure essential for reacting effectively to
speculative pressures/runs from these funds, considered one of the causes
of the Asian Crisis (Best, 2005; King, 2001).
9
The US (the Foreign Investments and National Security Act, or FINSA
2007) and Germany developed their own SWF investment scrutiny bodies
to respond to security concerns about the possible political motives behind
SWF transactions. Other European countries such as Italy, France and The
Netherlands debated setting limits on the percentage of shares of a
company that could be owned by a SWF or de?ning certain sectors as
off-limit to SWFs (NYTimes, 2007a). Indeed, the replication of such national
regulatory processes in western countries posed a signi?cant risk for SWFs
and their western expansion.
A. Mehrpouya / Accounting, Organizations and Society 44 (2015) 15–36 23
were keen on including the state-owned enterprises in the
process (the UK government highlighting the need for a
‘‘Gazprom clause’’) to limit ‘‘activities of SWFs or
state-owned enterprises or nominally private companies
from countries where the line between public and private
ownership is unclear’’ (USMFA_Warsaw, 2008). The UST
played a key role in 2007 in de?ning the boundary of the
term ‘‘SWF’’ and in ensuring that it would not be con-
founded with state-owned enterprises (SOEs). During a
meeting with a senior advisor to the European
Commission president, the UST deputy secretary stated
(USMFA_Brussels, 2007):
‘‘. . .many people expressing concern on SWFs are really
concerned about state-owned enterprises (SOEs) and
other state-owned assets.’’
UST staff made similar statements in meetings
with European governments (USMFA_Hamburg, 2007;
USMFA_London, 2008; USMFA_Paris, 2007).
Several funds strongly resisted the SWF label. In an
illustrative case, in a meeting with the UST of?cials, the
German ?nance minister noted (USMFA_Hamburg, 2007):
‘‘Russia, which established a stability fund, does not
want to be compared with China.’’
In a further UST meeting, the head of Mubadala (a UAE
fund owned by the government of Abu Dhabi) expressed
reservations about ‘‘engaging in an exercise that would
associate his fund with other funds that merited concern,
such as Chinese and Russian entities’’ (USMFA_AbuDhabi,
2007d). Similarly, a Mubadala director stated in a meeting
with the UST representative that Mubadala objected to
being ‘‘put into a barrel for everyone to shoot at’’
(USMFA_AbuDhabi, 2007c). KIA’s managing director
rhetorically asked UST of?cials why they would not
include US public pension funds such as CalPERS in such
a process (USMFA_Kuwait, 2007b). In other words, SWF
country of?cials either attempted to exclude themselves
from the regime’s targets or to turn the focus back on
demanders of the accounts (by suggesting that US pension
funds be included in the targets, for example).
By late 2007, several de?nitions for SWFs were circulat-
ing, leading to the inclusion of some government-owned
funds and the exclusion of others. To achieve consensus,
the UST sought to reassure each SWF government that
they were not the primary targets of the accountability
process. For example, they informed Singaporean funds
that the process was intended for other SWFs that failed
to demonstrate Singapore’s ‘‘strong administrative
culture’’ (USMFA_Singapore, 2007). To Kuwaitis (KIA being
the oldest SWF, founded in 1953), they argued that the
process was not intended for ‘‘mature and well-developed
funds’’ since they most certainly already employed best
practices (USMFA_Kuwait, 2007b). In a meeting with ADIA
(the largest SWF at the time), UST of?cials argued that
the process sought to hold accountable smaller funds with
less capacity, not well managed SWFs such as ADIA
(USMFA_AbuDhabi, 2007a). By differentiating between the
‘‘formal targets’’ of the regime and the ‘‘real targets’’, i.e.,
smaller, recently-established funds, the UST attempted to
co-opt the more powerful SWFs.
Following its establishment by the IMF, the
International Working Group helped settle the debate by
providing its own de?nition of SWFs in the GAPP ?nal
report (IMF, 2008a):
‘‘Sovereign wealth funds (SWFs) are special-purpose
investment funds or arrangements that are owned
by the general government. Created by the general
government for macro-economic purposes, SWFs hold,
manage or administer assets to achieve ?nancial
objectives, and employ a set of investment strategies
that include investing in foreign ?nancial assets.’’
This led to the inclusion of all well-known government
investment funds and the exclusion of state-owned
enterprises, thus helping to circumvent objections from
countries with numerous and large SOEs (e.g. Russia,
China, and France).
According to a recent report by the US-China Economic
and Security Review Commission (USCC, 2013):
‘‘Although the Chinese government recognizes only CIC
as an of?cial SWF, the Sovereign Wealth Fund Institute,
an independent consultancy, has identi?ed four Chinese
SWFs.’’
This quote illustrates that contesting the boundaries of
the SWF category as the accountability target continued
even after the launch of the GAPP. According to Garsten
and Bostrom (2008, p. 15), in accountability regimes
‘‘through processes of categorization, certain limited and
manageable parts of reality are included whereas others
are excluded as ‘irrelevant’ or are simply not seen by the
actors’’. This case shows the contentious process and the
discursive strategies through which the boundary of the
accountability targets is negotiated.
Accountability to whom? The public or markets?
For SWFs, major tensions centered on whether they
should be considered state entities accountable to the pub-
lic or market actors accountable to ?nancial markets.
Historically, most SWFs had agendas that went beyond
maximising ?nancial returns. For instance, funds such
as Temasek retained explicit national developmental
objectives, to create jobs and to contribute to Singapore’s
economic survival, progress and prosperity (Temasek,
2002). The Qatar Investment Authority and the Kuwait
Investment Authority undertook development projects in
Syria (Reuters, 2008) and the Norwegian GPFG had a
divestment process to ensure it was not complicit in
any unethical behaviour of its portfolio companies.
Interestingly at the time, the head of the World Bank sug-
gested that SWFs should invest 1% of their capital in Africa
(World Bank, 2008).
The issue of accountability to local populations was
raised a number of times during UST meetings with
SWFs. Whenever con?icts arose between the accountabil-
ity of SWFs to local populations and markets, the UST
would prioritise the market focus. A 2008 report by the
US Charge d’Affaires in the Abu Dhabi highlights
(USMFA_AbuDhabi, 2008):
24 A. Mehrpouya / Accounting, Organizations and Society 44 (2015) 15–36
‘‘In the past, there have been some regional invest-
ments, managed by ADIA and now the Abu Dhabi
Investment Council, that appear to have had an assis-
tance motivation. In addition, UAE investment organi-
zations invest in developing markets. In fact, were the
US Government to push for SWFs to serve as aid agen-
cies, this could risk undercutting our position that
SWF investments should be made solely on economic/-
commercial grounds (rather than to advance geopoliti-
cal goals).’’
This shows how the developmental and public role of
SWFs was considered undesirable and a barrier to them
being ‘‘pure’’ market actors (because it would open the
door to other ‘‘non-market’’ geopolitical objectives). In a
meeting with European Union of?cials, the UST deputy
secretary af?rmed (USMFA_Brussels, 2007):
‘‘Concerns also exist that transparency regarding overall
fund assets could lead to political pressure for these
resources to be used for public ?nance. We must be
careful to seek appropriate levels of transparency that
do not undermine SWF abilities to operate according
to market principles.’’
Should transparency lead to public demands on SWFs,
the UST preferred to avoid pushing the issue as it con?icted
with the ‘‘market principle’’. According to interviewees, the
UST remained adamant during the GAPP process that SWFs
should only focus on economic objectives and ?nancial
returns. Finally, and partly due to the concerns of the
Norwegian SWF that sought to maintain its ethical council,
although the GAPP requests SWFs to focus on
‘‘risk-adjusted ?nancial returns’’, it demands in a
sub-principle that funds disclose any ‘‘non-?nancial objec-
tives’’ (see GAPP clause 19).
10
This is consistent with the
broader shift of global accountability regimes from provid-
ing accounts to stakeholders or publics to focusing on share-
holders and markets (Smyth, 2012; Young, 2006). In this
case however, two ideas of the ‘‘public’’ as imagined users
of accounts had to be marginalised to enable the focus on
markets – western publics and SWF country publics, each
with a different set of public accountability demands.
What is the appropriate action? Prognostic struggles
As in the case of the Asian Crisis (Arnold, 2012), pro-
posed courses of action to address the SWF accountability
gap ranged from bilateral to multilateral, from transna-
tional to national and from hard regulation to voluntary
processes. The UST primarily pushed for a voluntary
multilateral code focusing on transparency as the primary
accountability solution. In meetings with Middle Eastern,
Chinese, Singaporean, Russian and European of?cials,
the UST employed various arguments to legitimise a
multilateral, voluntary approach, hosted by the IMF or
the World Bank (USMFA_Warsaw, 2008; USMFA_Beijing,
2008; USMFA_Dubai, 2007; USMFA_Hamburg, 2007;
USMFA_Kuwait, 2007b; USMFA_London, 2008;
USMFA_Singapore, 2007; USMFA_State, 2008). In the
diplomatic cable about a meeting with the German ?nance
minister, the UST deputy secretary is quoted stating
(USMFA_Hamburg, 2007):
‘‘a developing suspicion among APEC and G20 member
state representatives that the G7 member states are
attempting to restrain them in the area of SWFs. This
needs to be avoided by supporting technical discussions
in multilateral fora.’’
This quote demonstrates that IMF multilateral process
was supposed to diminish the sense that the US or the west
were attempting to limit G20 SWF investments. Similarly,
in a meeting between UST of?cials, the Abu Dhabi
Investment Authority’s managing director and the foreign
affairs director for the Abu Dhabi Crown Prince, the latter
stated (USMFA_AbuDhabi, 2007a):
‘‘SWF guidelines seemed like a good pre-emptive
measure and working with the IMF would remove the
perception that this was a US-imposed solution.’’
This quote shows clearly that for the receiving side,
too, an accountability regime facilitated through a multi-
lateral organisation would be more acceptable in the
eyes of the public compared to direct and public US
intermediation.
In contrast, actors such as the French general director of
treasury and economic policy raised doubts ‘‘that generic
approaches such as rules on governance and transparency
would suf?ce in cases such as Russia and China, where it
was hard to take seriously purported ‘independence’ of
board members, for instance’’ (USMFA_Paris, 2007 –
emphasis in original text). He suggested instead that
SWFs ‘‘keep a low pro?le, e.g., staying below three per cent
interest in any one company and investing through inter-
mediary funds rather than directly’’ (USMFA_Paris, 2007).
Other actors, such as German ?nance of?cials, argued for
the exclusion of ‘‘sensitive’’ sectors such as defence, tele-
com networks, steel, electricity and food. In response, the
US national security council deputy warned, ‘‘rather than
debate this, the US and the EU must ?nd a cooperative
solution that does not require legislation’’ (USMFA_State,
2007).
In a meeting with the UST of?cials the Singapore
?nance minister proposed that, ‘‘the United States would
get better traction with a quiet, informal, bilateral
approach than with institutionalizing the work multilater-
ally’’ (USMFA_Singapore, 2007). The UST international
monetary policy director, responded:
‘‘We were already engaged bilaterally with different
SWFs. In addition, a multilaterally-agreed framework
for SWF best practices could also help diffuse
10
Interestingly, since 2007, all major SWFs have formulated or reformu-
lated their public statements on mission and strategy in pure economic
terms. For example, Temasek revised its charter in August 2009, altering its
previously-stated mission of ‘‘develop economically viable businesses,
retain and create jobs, and contribute to Singapore’s economic survival,
progress and prosperity’’ (Temasek, 2002). The new charter describes the
fund as an investment company managed along ‘‘commercial principles’’,
aiming only to deliver long-term value for its shareholders. The new charter
makes no mention of Temasek’s sole shareholder (Temasek, 2009), the
Government of Singapore (USMFA_Singapore, 2009), despite the fund
having been run by the wife of the Prime Minister since 2002 (NYTimes,
2014).
A. Mehrpouya / Accounting, Organizations and Society 44 (2015) 15–36 25
protectionist tensions, mitigate any systemic risk, and help
guide countries that were setting up new SWFs to think
through issues carefully’’ (emphasis added).
As shown, the UST pursued a bilateral approach to
addressing issues with SWFs. The multilateral and volun-
tary process was deemed to primarily mitigate issues of
market stability and openness including ‘‘systemic risks’’
and ‘‘protectionist tensions’’ and to help ‘‘new SWFs’’. As
illustrated, amongst the solutions proposed, the voluntary,
multilateral approach was established principally through
the push of the UST and the receptiveness of more power-
ful SWFs to such a voluntary regime. Again due to the
strong position of SWF countries, this case presents radi-
cally different dynamics from the Financial Stability
Forum where the UST (and western states), in particular,
was a visible and vocal arbiter (Arnold, 2012).
Although the UST did engage in bilateral negotiations
with a broad set of SWFs, funds from the UAE and
Singapore were particularly central to the groundwork it
undertook. In fact, the UST considered these funds as regio-
nal leaders who would be followed by others in their local-
ities. This is illustrated by the ADIA co-chairing the
IWG-SWF, responsible for developing the GAPP.
Furthermore, press releases following the launch of the
GAPP were issued by the ADIA on the behalf of other
Gulf funds (OECD, 2008a). A diplomatic cable on a meeting
between UST of?cials and the Singaporean ?nance minis-
ter highlights (USMFA_Singapore, 2007):
‘‘Given the large size, long history and perceived suc-
cess of funds such as Temasek and GIC, any effort to
develop international best practices that did not include
Singapore would have less legitimacy among many
Asian countries now attempting to establish their own
SWFs.’’
In parallel to the broader groundwork setting the
GAPP’s boundaries, the UST engaged in ‘‘quiet consulta-
tions’’ with the UAE and Singapore, leading to the
release of the Singapore Principles in March 2008 (right
before the start of the of?cial IMF-led GAPP negotia-
tions). According to the UST undersecretary for interna-
tional affairs in a 2007 meeting with UAE of?cials: ‘‘to
jumpstart the IMF-led best practices effort, the US,
UAE and Singapore could begin quiet consultations as
regional leaders to outline investment principles for
SWFs’’ (USMFA_AbuDhabi, 2007d). The UST press release
for the Singapore Principles states (US-Treasury,
2008):
‘‘The United States, Abu Dhabi, and Singapore, being a
group of nations with SWFs and a country receiving
investments from SWFs, have a common interest in an
open and stable international ?nancial system. We sup-
port the processes underway in the International
Monetary Fund (IMF) and the Organization for
Economic Cooperation and Development (OECD) to
develop voluntary best practices for SWFs and inward
investment regimes for government-controlled invest-
ment in recipient countries, respectively . . . We hope
that the IMF and OECD’s work can build upon these
basic principles.’’
The Singapore Principles included a de?nition of SWFs
and ?ve principles for SWF countries, emphasising their
need to focus on a purely commercial and non-political
agenda to disclose governance structures. It also outlined
four principles for recipient countries accentuating the
‘‘freedom of capital’’ and the ‘‘fair’’ treatment of SWFs (as
with any other market actor) (US-Treasury, 2008). This
set the tone and the boundaries of the regime, while the
negotiation of the details of the accountability relationship
was left to the formal GAPP negotiation process which had
a wider participation and public visibility.
Settling the process and technologies of the
accountability relationship
The formal negotiations took place over three sessions
from June to September 2008 in Washington, Singapore
and Santiago (Chile). During this period, three drafting sub-
committees headed by SWF representatives took over the
revision of the original draft and ?nalisation of the code.
The IMF provided the original outline for GAPP and the sec-
retariat for the meetings. An IMF executive and the under-
secretary of the Abu Dhabi ?nance department co-chaired
the meetings. According to interviewees, during the ?rst
meeting in Washington, the IMF tended to be more pre-
scriptive, considered somewhat ‘‘heavy-handed’’ by certain
funds. Given contestation from a number of funds (partic-
ularly from the Middle East) from the second meeting
onwards, SWFs began taking over with the IMF playing a
less visible role. Contentious issues at stake included the
logic underlying SWF investments (whether purely eco-
nomic or not), funds’ relationships with respective local
governments, their investment portfolio and the type of
shareholder rights/in?uence exercised within, and their
size/capital ?ows, given the perceived implications for
the macroeconomic stability of western markets (see the
GAPP for further details). In the following section, I elabo-
rate on the struggles involved in negotiating the standards,
surveillance and compliance components (Wade, 2007) of
this accountability regime.
From standards of ideal SWF to transparency
Compared to other recent transnational accountability
processes involving non-western states (Arnold, 2005,
2012), the ?nal GAPP remains vague on technical details
and includes no speci?c guidelines or standards in areas
such as accounting, audit, risk management, investment
management and governance. Neither does it cross-
reference other international codes. Regarding accounting
disclosure, GAPP 11 in the ?nal code states:
‘‘GAPP 11. An annual report and accompanying ?nancial
statements on the SWF’s operations and performance
should be prepared in a timely fashion and in accor-
dance with recognized international or national
accounting standards in a consistent manner.’’
Similarly for audit, GAPP 12 states:
‘‘The SWF’s operations and ?nancial statements should
be audited annually in accordance with recognized
26 A. Mehrpouya / Accounting, Organizations and Society 44 (2015) 15–36
international or national auditing standards in a consis-
tent manner. . . [The commentary for this clause later
states that] The audit procedures should be open for
review.’’
This leaves the choice of accounting and audit standards
to the discretion of SWFs and stops short of requiring inter-
national accounting and audit standards – the hallmark of
other recent transnational regulatory processes involving
non-Western countries (e.g. the Financial Stability Forum
– see Arnold, 2012; Halliday & Carruthers, 2009).
However, the Big Four audit ?rms have jumped on the
bandwagon, providing services such as tax management
assistance and auditing (Deloitte, 2008) to SWFs. As
Norton (2010, p. 515) points out, the GAPP in a practical
sense ‘‘opens the door to the major international account-
ing ?rms to take a role in shaping these ‘standards’’’.
In the same vein, for risk management the code
demands that:
‘‘GAPP 22. The SWF should have a framework that iden-
ti?es, assesses, and manages the risks of its operations.
. . .
GAPP 22.2. Sub-principle. The general approach to the
SWF’s risk management framework should be publicly
disclosed.’’
For accountability structures, the code recommends:
‘‘GAPP 10. Principle. The accountability framework for
the SWF’s operations should be clearly de?ned in the
relevant legislation, charter, other constitutive docu-
ments or management agreement.’’
It is interesting to observe that since de?ning and regu-
lating based on speci?c technical speci?cations and stan-
dards were deemed impossible, the regulatory process
replaced speci?c standards with a demand for the public
disclosure or transparency of SWF structures, processes
and practices. Following such disclosure, standards for
judgment were to be later developed by market actors, pri-
marily international accounting, audit and consulting
?rms.
From compliance pressures to transparency
A further contentious topic concerned veri?cation and
compliance processes. At several points during the bilat-
eral negotiations, UST of?cials emphasised the
non-binding and voluntary nature of the code. In an illus-
trative case, in a meeting with Kuwaiti of?cials, the UST
international monetary policy director stressed (USMFA_
Kuwait, 2007a):
‘‘The US was not trying to tell SWFs how to manage
asset allocation or even asking for full disclosure of
speci?c investments but rather promoting the develop-
ment of a non-binding set of common principles for
governance and risk management to which SWFs could
voluntarily subscribe.’’
The IMF was initially planning to include a central ver-
i?cation process similar to the one introduced following
the Asian Crisis (the ROSCs) to push for compliance,
although this was later abandoned given resistance from
funds. As one interviewee stated, ‘‘it was hard to reach
an agreement on veri?cation. Early drafts tried to include
it one way or another, something that the IMF could under-
take as part of some consultation or other. Someone else
like an external auditor could be hired to do this, but it
ended up as a type of a political document or a voluntary
set of principles that have to be adhered to.’’
The ?nal version of GAPP 24 on veri?cation reads: ‘‘A
process of regular review of the implementation of the
GAPP should be engaged in by or on behalf of the SWF’’.
This leaves veri?cation to the discretion of the SWF and
it can be carried out internally.
Following the release of the GAPP on October 13th
2008, the United Arab Emirates Finance Minister stated
on behalf of all Middle Eastern SWFs (OECD, 2008a):
‘‘In view of the voluntary and consensus-based charac-
ter of the initiative, we are not convinced of proposals
to monitor the implementation of the Principles. We
have previously cautioned against ‘voluntary’ initiatives
by the Fund (International Monetary Fund) from devel-
oping into ‘mandatory’ practices, which would detract
from the ownership of these Principles by the SWFs.’’
(emphasis in original document)
On the same day following the release, the EU stated
(OECD, 2008a):
‘‘. . . It is now important that the GAPP is effectively
implemented by a suf?ciently large number of SWFs.
It is equally important that a standing group is estab-
lished to monitor the implementation of the GAPP.’’
This illustrates the contrasting views of the EU and
SWFs on GAPP veri?cation and compliance processes. As
of September 2014, neither the IMF nor the standing body
created in the wake of the code’s release (the International
Forum of Sovereign Wealth Funds) has introduced any
such veri?cation processes. A range of private rankings
and ratings of the SWFs’ compliance with the GAPP and
their transparency have however emerged (Linaburg,
2012; Riskmetrics, 2009; Truman, 2011). This contrasts
with the IMF and the World Banks’s role in issuing ROSCs
and the use of conditional loans to push for compliance
(Humphrey et al., 2009). As a Wall Street Journal article
in September 2008 highlighted (WSJ, 2008):
‘‘It is likely that the principles will get a warm welcome
from treasuries in wealthy nations. But it is far from
clear that they will reassure lawmakers and other critics
within those countries. The IMF won’t monitor,
let alone police, the way the funds apply the principles.
Rather, the funds themselves are likely to set up some
kind of loose oversight arrangement.’’
This quote highlights the difference between the expec-
tations of western treasuries and those of legislative bodies
with regard to evaluation and compliance.
Challenging transparency/surveillance pressures
The previous section described how attempts to set
technical standards in areas such as accounting, audit
A. Mehrpouya / Accounting, Organizations and Society 44 (2015) 15–36 27
and risk management, and centralised veri?cation mecha-
nisms were replaced by transparency demands in those
areas. This is another example where the ‘‘international
regulatory system relies chie?y on transparency as a
mechanism for governing risky and crisis prone global
?nancial markets’’ (Arnold, 2009b, p. 62).
The ?rst public report released by the IMF, Sovereign
Wealth Funds – A Work Agenda, released in March 2008
and setting out the contours of the GAPP process states
(IMF, 2008b):
‘‘Transparency is of interest to very different groups . . .
the case for such a (transparency) focus is twofold. First,
clear governance structures will help foster accountabil-
ity and a disciplined and stable investment policy which
reduces ?scal risk and promotes ?nancial stability.
Second, transparency contributes to the ef?cient alloca-
tion of resources by ensuring that markets and the public
have information to identify risks and better assess SWF
behaviour’’ (stress added).
This shows that early in the process, transparency was
formulated both as useful for market governance and for
public accountability in SWF countries. The most sensitive
and contentious areas were transparency of size,
short-term returns, asset allocation/portfolios and the
exercising of shareholder rights. Disclosing size and
returns would lead to local public scrutiny and demands,
while asset allocation and the exercising of shareholder
rights would result in a greater scrutiny of SWFs regarding
political motives and strategic use of capital.
As mentionedearlier, the UST believedthat transparency
hadtobe requiredif it wouldnot leadtopublic demands dis-
torting the commercial and market-based focus of SWFs.
The Middle Eastern funds represented by ADIA and the
Qatari and Kuwaiti spokespersons were largely apprehen-
sive about their local population’s access to information
and according to an interviewee ‘‘opinions varied greatly
on the extent to which citizens of a country have a need
to know.’’
These funds publicly disclosed very little information
beyond the naming of their executive team and board. In
a meeting between the UST, the UAE SWFs and ?nance of?-
cials, the Managing Director of ADIA declared
(USMFA_AbuDhabi, 2007a) that ADIA did not disclose the
size of its foreign investments publicly and that ‘‘con?den-
tiality was a policy directed from above’’ (emphasis added).
The Qatari and Kuwaiti of?cials cited local laws as the key
barriers to transparency. QIA of?cials mentioned in a meet-
ing with UST of?cials that ‘‘only ?ve or six people in Qatar
know’’ about its asset allocation, that such disclosure is
against local regulations and that ‘‘even to the IMF, it is
only ‘whispered’’’. (USMFA_Qatar, 2008 – emphasis in orig-
inal document). This demonstrates how Qatari of?cials did
not perceive as relevant any bene?ts from disclosure
beyond those for investors and the IMF. UAE of?cials were
in addition concerned about the access of other emirates
and Arab publics to information because it could lead to
expectations for ?nancial assistance since ‘‘some Arab
states viewed oil as part of the Arab patrimony and not
the resource of any one country’’ (USMFA_AbuDhabi,
2007b – emphasis added). They emphasised that they
preferred not to raise their ‘‘public pro?le or talk to the
media’’ (USMFA_AbuDhabi, 2007a).
The concerns of Singaporean funds about transparency
seem to have been different as they appeared more appre-
hensive about the impact of such transparency on the
fund’s business operations due to the resulting media
and public pressure. In a meeting with UST of?cials, the
Singapore ?nance minister af?rmed (USMFA_Singapore,
2007):
‘‘It would be inappropriate to disclose the total assets of
GIC because it would create domestic pressure to
reduce savings for future needs.’’
Similarly, at the time, a senior advisor to the Chinese
government highlighted that such disclosure could distract
the fund from ‘‘focus on maximizing long-run returns, sub-
jecting it to greater political interference and media
second-guessing.’’ (USMFA_HongKong, 2007).
The Norwegian SWF af?rmed that open access to infor-
mation constituted a right of the Norwegian people as set
out in the Freedom of Information Act (Regjeringen,
2010). According to interviewees, the Norwegian fund is
run with the local public as the primary stakeholder and
the national politics is the key concern in the fund’s public
disclosure. The IMF and other international audiences are
considered secondary users of information, contrasting
with Middle Eastern and Asian funds that disclose informa-
tion primarily for international stakeholders.
Further to the resistance levelled against public disclo-
sure, certain details relating to disclosure clauses were
dropped during the negotiation process, and several public
disclosure requirements removed altogether. Nonetheless,
16 out of the 24 principles recommend the increased pub-
lic disclosure in areas including funds’ sources, purpose,
legal structure, governance structure, investment policy,
general approach to risk management and ownership
rights. Interestingly, the word ‘‘transparency’’ is not men-
tioned once in the GAPP clauses, in stark contrast to the
original IMF Working Agenda (IMF, 2008b) where the term
was employed 47 times.
Several years after the launch of the code, western
media and regulatory bodies continue to emphasise the
lack of SWF transparency (Financial Times, 2012b; USCC,
2013 – see also the SWFs’ transparency ranking by
Linaburg & Maduell, 2012). At the same time, funds such
as Temasek, CIC, QIA and KIA have become much more
assertive in their international investments. For example,
in 2012 QIA purchased a 20% stake in BAA, the British ?rm
that owns ?ve British airports including London Heathrow.
In the same year, QIA (through its subsidiary Qatar Holding
– chaired by the Qatari Prime Minister) ‘‘confounded the
mining world after building up a 12 per cent stake in
Xstrata and effectively blocking its merger with Glencore
by demanding a better deal’’ (Financial Times, 2012a).
Chinese funds, now amongst the largest in the world, have
been active in the acquisition of natural resource assets in
Australia, Canada, Russia and Africa, as well as the pur-
chase of shares in the Chinese ?nancial sector (Murphy,
2012). This level of SWF activity and the funds’ explicit ties
with national politics was unthinkable at the peak of the
public debate surrounding SWFs in 2008.
28 A. Mehrpouya / Accounting, Organizations and Society 44 (2015) 15–36
Discussion
The case of SWFs and the GAPP is a rare example of
building a transnational accountability regime from
scratch for a hitherto vaguely de?ned category of organisa-
tions, mostly from non-western contexts. A host of recent
studies in accounting and global governance have dealt
with the institutional dynamics of the emergence of the
‘‘new ?nancial architecture’’ following the Asian Crisis
and the Global Financial Crisis, and the central role of
transparency, accounting and audit standards in this trans-
formation (Arnold, 2012; Halliday & Carruthers, 2009;
Humphrey & Loft, 2009; Humphrey et al., 2009; Wade,
2007, 2010). While the GAPP case is part of the broader
restructuring of the global ?nancial architecture, it is sig-
ni?cantly different from other cases because of the
remarkable level of power and voice of non-western coun-
tries in the process. Attempting to regulate well-endowed
and fast-expanding funds owned by countries such as
China and Russia at a time when western ?rms were des-
perate for liquidity led to a vastly different distribution of
power compared to past cases. Traditional sources of coer-
cion used by the IMF, such as conditional loans, were inef-
fective in this case. In addition, larger SWFs endowed with
western-trained teams had much more capability and
proximity to world society culture (Halliday & Carruthers,
2009) and could play a more central role in the transna-
tional governance process. This is a fundamental difference
compared to the role of the Asian economies during the
institution of the Financial Stability Forumin the aftermath
of the Asian Crisis. As a result, during the negotiations lead-
ing to the settlement of each aspect of the GAPP account-
ability regime, tensions were not simply between the
‘‘west and the rest’’ (Hall, 1992) or the core and peripheral
states (Hopkins & Wallerstein, 1982). Instead, complex
processes of co-optation and coalition building took place,
transcending these traditional boundaries.
Despite the diversity and power of the targets of the
accountability regime, a key factor that made achieving
consensus around a voluntary code primarily focused on
transparency possible was that the interests and goals of
the UST and SWF countries’ ?nance of?cials were generally
aligned around maintaining SWF capital ?ows to the west.
While the US senate, congress and European of?cials
expressed qualms about the security implications of
SWFs, the UST’s work was structured by two norms: main-
taining the freedom of capital ?ows of SWFs and avoiding
the hard regulation of SWFs in recipient countries. This
was driven by the immediate need of American multina-
tionals for SWF capital during the global ?nancial crisis,
and the longer-term focus of the UST on ensuring that
the US dollar and US assets remained the preferred desti-
nation for resource and export-driven surpluses of SWF
countries (CRS, 2008). Moreover, as expressed in many
quotes, the UST demonstrated a fundamental commitment
to the ‘‘freedom of capital ?ows principle’’ which in the
post-Washington Consensus era has been fundamental to
UST policy (Arrighi & Zhang, 2011).
In turn, SWF countries sought to ensure that western
publics’ concerns about them were tamed and that their
access to western ?nancial markets was maintained. For
certain funds, particularly from the Middle East, this was
crucial given the insuf?cient investment opportunities in
local markets and for some other funds such international
investments were central to their diversi?cation strategies.
This led to a singular focus by the UST and SWFs on achiev-
ing a code that would help tame the concerns of western
publics and regulators, yet not cause any ‘‘market distort-
ing’’ public demands in SWF home countries. As a result,
the UST’s expectations of the GAPP process were more clo-
sely aligned with the expectations of SWFs (including
Middle Eastern, Singaporean and even Chinese and
Russian funds) than with those of European and US legisla-
tive houses.
As shown, the UST and Singaporean and Abu Dhabi
state of?cials/funds were key actors in the coalition that
steered the process. The UST was very clear about the need
to have on board these other players since they were con-
sidered to be highly legitimate regional leaders that other
funds would follow. The UST did attempt to co-opt other
funds, but none were involved in the more intimate steer-
ing of the process (as evident in the release of the
Singapore Principles). Conversely, as well as being new
actors in the SWF space, Chinese and Russian funds, for
example, were not traditional US allies and were politically
dif?cult to co-opt. Others such as Kuwait and Qatar were
not ‘‘core’’ actors in the SWF ?eld. In other words, the
UST co-opted ‘‘powerful’’ (large SWFs with high regional
legitimacy and low cultural/social distance from global
governing arenas)
11
and ‘‘friendly’’ SWF states in the core
coalition (e.g. Singapore and the UAE), briefed and managed
the reactions of ‘‘powerful but less friendly’’ SWF states (e.g.
China and Russia) and mostly ignored weaker or ‘‘periph-
eral’’ SWF states (e.g. Venezuela, Chile and Iran).
Interestingly, European actors – traditionally considered as
global core actors – in this case were excluded from the core
coalition: instead, the coalition managed and/or tamed their
concerns. A strong case of ‘‘actor mismatch’’ (Halliday &
Carruthers, 2009, p.19) – the mismatch between actors
involved in the enactment of the regime and those affected
or concerned by it at the national level – led to a situation
where the focus was on maintaining capital ?ows.
As Table 2 shows, each aspect of the accountability
regime began with several competing templates.
Regarding the targets of the regime and de?nition of the
‘‘SWFs’’, different actors attempted to limit or extend its
boundaries – or to exclude themselves from it. Some
European countries aimed at including SOEs (the
Gazprom clause), some SWFs proposed including
Western pension funds, and the UST emphasized the need
to differentiate between the SWFs and the SOEs – to avoid
the sensitive political issues related to the latter. Boundary
setting for the accountability targets was one of the very
contentious aspects of this regime and the debates about
11
‘‘Power’’ in this paper is based on Halliday and Carruthers’s (2009)
concept of power in global governance, driven by the material and symbolic
(legitimacy and alliances/networks) power of a nation and its social/cul-
tural distance from global governing arenas/culture. For further details, see
the analysis of SWF power dynamics on page 20.
A. Mehrpouya / Accounting, Organizations and Society 44 (2015) 15–36 29
which fund is and which fund is not a SWF continues to
present.
The ‘‘accountability problem’’ that the GAPP was to
address, according to the UST and the larger SWFs, was pri-
marily about avoiding ‘‘protectionist regulatory backlash’’
from western regulators. The central role of these actors
in steering the process meant that a range of western secu-
rity concerns were excluded in the formulation of the
problem, with the ?nal formulation focusing on market
stability, the prevention of protectionist backlash from
Table 2
Struggles during enactment of the GAPP accountability regime.
Accountability
process
Different templates Struggles Final settlement
Constituting the
Boundaries of
the
Accountability
Regime
Establishing the
accountability
problem
(diagnostic
struggles)
Potential political and
security risks associated
to SWFs in recipient
countries
‘‘Protectionist backlash’’
against SWFs’ investments
Systemic risk of SWFs for
?nancial markets
Lack of public accountabil-
ity in SWF countries
Tensions between market and public
accountability ‘problems’ – with UST
focusing on ‘‘openness and stability’
of markets and SWFs focused speci?-
cally on regulatory backlash against
them
Legislative bodies and media in the
West focused on security issues
Maintaining open and
stable markets, mitigating
protectionist backlash,
helping new/smaller funds
Identifying the
accountability
targets
Including State-Owned
Enterprises (SOEs)
Including public pension
funds among targets
Including only government
owned funds that are not
separate legal entities
Including only government
funds that invest in inter-
national equity markets
Resistance by some funds to be catego-
rized as SWFs or attempts to include a
wider set of investors including pen-
sion and hedge funds
Some European countries demanding
the inclusion of state-owned enter-
prises among targets
Exclusion of SOEs –
inclusion of all major oil
and exports ?nanced funds
Establishing the
imagined users
of accounts
Western legislative bodies
and publics – to address
concerns over security
SWF country/region pub-
lics – issues of develop-
ment investment and
public accountability
International markets - to
ensure fair competition
with other investors and
mitigating systemic mar-
ket risks
The US Treasury keen on maintaining
SWFs as pure market actors
Some Middle Eastern SWFs concerned
about redistributional pressures from
regional publics
Some SWFs such as the Norwegian
fund concerned because it has a divest-
ment process based on ethical criteria
Marginalizing state role of
SWFs – focus on
maintaining SWFs as pure
market actors
Establishing the
accountability
action
(prognostic
struggles)
Bilateral negotiations with
the UST
Multilateral process at the
IMF
National regulation by
excluding sensitive sec-
tors, and/or capping the
ownership of SWFs in
?rms
Preference of several European coun-
tries for hard regulation – and limits
on SWF investments
Some SWFs preferred a low pro?le
bilateral approach
UST preference for a transnational,
multi-lateral voluntary code
Multilateral process –
voluntary code – facilitated
by the IMF
Settling the Process
and
Technologies of
the
Accountability
Relationship
Establishing the
standards of the
ideal self
Referring only to principles
– and avoiding speci?cs
Referring to IFRS, IASs and
other existing standards
Resistance by funds against ‘prescrip-
tive and intrusive’ code – backed by
UST
No mention of
international standards –
replaced by transparency
Pressures for
compliance with
standards
IMF as the evaluator
SWFs themselves as
evaluators
Imposing an independent
external audit
SWFs resisted a mandatory evaluation
regime
UST also expressed support for a vol-
untary, non-binding regime
EU pushed for having an evaluation
regime
Focused on transparency of
evaluations – rather than
introducing an evaluation
process
Transparency
pressures for
account
production
Transparency enabling
SWFs’ local public
accountability
Transparency addressing
Western concerns about
SWFs’ political motives
Transparency aimed at the
?nancial market’s infor-
mation needs
Middle Eastern and Asian funds raised
different concerns about local public’s
access to information
The UST aimed to include transparency
that would not lead to public demands
which could go against ‘‘market
principle’’
Mostly broad – focused on
ensuring SWFs are focused
on ?nancial returns
30 A. Mehrpouya / Accounting, Organizations and Society 44 (2015) 15–36
receiving countries and assisting new funds. Similarly, due
to the aligned interests of SWFs and the UST, local SWF
country publics were excluded from the ‘‘imagined users’’
of SWF accounts. Funds only had to provide accounts to
?nancial markets to ensure market ‘‘stability and open-
ness’’, meaning that the potential for SWF investment in
areas such as poverty alleviation, development and envi-
ronmental projects was marginalised in discussions and
ignored or excluded from GAPP negotiations.
As for ‘‘accountability action’’, the option selected from
propositions ranging from national regulation to transna-
tional bilateral and multilateral norm setting was to
develop a voluntary code in a multilateral arena (the
IMF). Such accountability action and its wide communica-
tion would help address the concerns of western legisla-
tors. Combined with the OECD code for recipient
countries, this would lead to avoiding the hard regulation
of SWF investments. In other words, the accountability
problem was formulated and the imagined users – markets
– de?ned such that the recommended action would not be
interventional, but would instead help address ‘‘market
distorting’’ public pressures on SWFs. Further, to avoid
adversarial reaction from the SWFs, the process had to be
seen not as the US/West imposing a regime, but as a partic-
ipatory process managed by a multilateral organisation:
the IMF.
The UST and the core coalition attempted to stabilise
the boundaries of the regime by releasing the Singapore
Principles before the formal, more inclusive and highly vis-
ible GAPP negotiations began. During the formal negotia-
tions, while the details of standards, compliance and
transparency pressures were challenged and foiled to dif-
ferent degrees, the regime’s boundaries set prior to the
negotiations remained mostly unchanged.
To achieve consensus during the formal negotiation
processes, the GAPP excluded international standards in
areas such as accounting, audit and risk management, as
well as an international compliance and evaluation regime.
In contrast to other cases such as the Asian Crisis, these
could be excluded partly because of the earlier under-
standing between SWFs and the UST that the code would
not be binding and intrusive. Most such clauses were
replaced by transparency requirements, leaving standard
formulation and compliance to other forums and market
actors. This is another case where transparency is treated
as a panacea (Arnold, 2012) and structuring the rest of
the accountability regime is delegated to markets and their
imagined disciplining power.
With regard to transparency pressures, too, there were
varying concerns depending on the national institutional
setting of the SWFs and their relationships to their local
publics (as summarized in Table 3). In the discussions
around the powerful norm of transparency, each party
was aiming at account production for a speci?c ‘‘public’’
while aiming to limit accountability demands from other
imagined publics. This points to the tortuous relationship
between accountability and transparency or public
disclosure.
For the UST, transparency should not enable public
accountability claims that would prevent SWFs from oper-
ating as ‘‘pure’’ market actors. For the Norwegian fund it
was primarily about accountability to the local public, for
Singapore and the UAE funds, it was about providing
accounts to the IMF and the recipient countries. Asian
funds were primarily concerned about the effects of the
public disclosure of their returns and portfolios because
of the implications of local public demands on their busi-
ness operations. Some Middle Eastern countries were anx-
ious about how information disclosure might result in
more national and Arab public pressures for greater
re-distributional policies and stressed the ruling families’
monopoly on information as a key barrier to public disclo-
sure. In other words, some SWF country of?cials saw the
legitimate public for transparency to be the local popula-
tion (Transparency as a public right), some saw disclosure
as needed for international market actors/regulators but
Table 3
Ideal types for attitudes to transparency.
Ideal types Type of concerns about Transparency Institutional setting Fund closer to this
ideal type
Preferred/intended
users for information
Preferred type of
disclosure
Transparency
as a public
right
None Decentralized
governance
Institutionalized citi-
zens’ information rights
Norwegian
Government Pen-
sion Fund –
Global
Local public
Public disclosure
Transparency
as a market
instrument
Access of local public to information – Intru-
sion of transparency with fund operations
due to public/media demands
Concerned primarily about disclosing fund’s
short term returns
High level of depen-
dence and interaction
with capital markets
Asian funds such
as Temasek of
Singapore
International
Markets –
regulators
Targeted disclo-
sure/selective
public disclosure
Transparency
as power
Access of local public to information – local
demands for redistributive and development
policies
Concerned especially about disclosing the size
of the fund and increase of public visibility in
general
Centralized power and
information structures
Middle Eastern
SWFs such as
ADIA, QIA and KIA
International
Markets –
regulators
Targeted disclo-
sure/no public
disclosure
A. Mehrpouya / Accounting, Organizations and Society 44 (2015) 15–36 31
were concerned about the business/market implications of
its public disclosure (Transparency as a market instru-
ment) and some aimed to maintain monopoly on informa-
tion because of concerns about redistributional demands
from their local publics, who had historically received little
information about the way they were governed
(Transparency as power).
Understanding these competing and complementing
ideas about the imagined ‘‘publics’’ for transparency and
the modes of accountability that such transparency can
enable is crucial to understanding the fast expanding role
of transparency in global governance regimes (Arnold,
2009a, 2009b, 2012) and can inform the broader debates
about the link between transparency and accountability
in governing (Roberts, 2009).
The UST was aware of the concerns of large Middle
Eastern and Asian SWFs about transparency and foresaw
the challenges that the GAPP process would have in
improving their public disclosure (USMFA_AbuDhabi,
2007a; USMFA_Singapore, 2007). However, it considered
the GAPP an effective tool for disciplining new and smaller
SWFs (USMFA_BandarSeriBegawan, 2007). This is consis-
tent with other studies which have shown that compliance
and change are more likely to occur among marginal and
peripheral actors (Clemens & Cook, 1999). In other words,
the GAPP was structured not as a tool for recipient coun-
tries or SWF country publics to hold SWFs to account,
but as a mechanism for the UST and core SWFs to tame
western regulatory concerns through ‘‘theatres of account-
ability’’ and to hold smaller, new and ‘‘peripheral SWFs’’ to
account. The on-going concerns about SWFs lack of trans-
parency raised in western media several years after the
release of the code further illustrates this point.
Below, I discuss three implications of this case for
debates on the political economy of accounting and
accountability.
Studying accountability processes and the marginalisation of
immanent ideas
Mobilising the accountability literature (Garsten &
Bostrom, 2008; McKernan & McPhail, 2012; Roberts,
1991; Roberts, 2009; Roberts & Scapens, 1985), this study
identi?es the processes involved in instituting the GAPP
accountability regime. Differentiating the accountability
regime from the accountability relationship proves espe-
cially useful because it brings attention to the
boundary-setting processes that help position a regime in
the broader global governance apparatus by establishing
the accountability problem/solution and the users/provi-
ders of accounts. In the GAPP case, the regime’s boundaries
were ?nalised and communicated (through the Singapore
Principles) before the formal negotiations started.
As shown, different actors voiced different ideas (col-
umns 3 and 4 of Table 2) regarding the various dimensions
of the accountability regime. Some of these ideas could
have resulted in an accountability regime more attentive
to social or developmental issues in SWF home countries
or regions and/or public concerns in recipient countries.
Others could have led to the SWFs becoming important
actors in addressing global developmental issues (e.g. the
World Bank’s proposal for SWFs to invest 1% of their capi-
tal in Africa). Some could have led to a more signi?cant role
for state-led regulation, and others would have led to pub-
lic disclosure aimed at enabling debates about the SWFs
and their role, in the SWF countries. This study shows
how the aligned interests of the UST and SWFs to maintain
unhindered SWF capital ?ows, the disproportionate repre-
sentation of ?nance of?cials in the negotiation process and
the greater power and capability of SWFs led to the
marginalization of all such alternative immanent ideas
for accountability. As a result, the regime diverged from
its other possible roles of holding SWFs to account
vis-a-vis western and SWF publics.
There have been several calls for re?ections on con-
temporary accountability structures and to propose alter-
natives to the dominant forms of hierarchical,
power-laden, transparency-based accountability regimes
which mostly rely on calculative and economized
accounts of targets (Kamuf, 2007; McKernan & McPhail,
2012). This study responds to such calls by exploring
the processes through which alternative ideas about each
aspect of the accountability regime emerge in the GAPP
negotiations process and how these ideas are margina-
lised. Attention to immanent ideas helps re?ect on the
‘‘possibilities of accountability’’ (Roberts, 1991) that are
tamed due to the dominant ideologies and power struc-
tures in global governance arenas and helps better under-
stand the institutional setting and collective agencies that
lead to the dominance of one idea of accountability at the
expense of others.
Resorting to transparency and resistance to transparency
Since the 1990s and the transnational regulatory
response to the Mexican and Asian Crises, transparency
based on ?nancial accounting and audit ideals have been
central to all major transnational regulatory regimes
(Rodan, 2002). In the case of the Asian Crisis, the standards
of disclosure and the evaluation regime were set by the
IMF and the World Bank relying on transparency for
achieving compliance through the disciplining force of
the ?nancial markets (Arnold, 2012; Best, 2005). This case
illustrates a much more expansive role for transparency
compared to the regulatory response to the Asian Crisis.
The process leading to the enactment of the GAPP demon-
strates how the standards, surveillance and compliance
pillars of the new ?nancial architecture were challenged.
(Wade, 2007). Speci?c international accounting, audit
and risk management standards and compliance/evalua-
tion processes were excluded from the code and replaced
by transparency pressures.
However, this falling back on transparency was also
contentious, as the notion meant different things to dif-
ferent accountability targets and faced various pushbacks
depending on national context and their desired and
undesired imagined ‘‘publics’’ for their public disclosure
(summarised in Table 3). The case shows the importance
of perceiving transparency from the vantage point of
32 A. Mehrpouya / Accounting, Organizations and Society 44 (2015) 15–36
transnational accountability regime targets. Understanding
their perspectives on norms such as transparency is espe-
cially important because of the increased power and
voice of such actors in global governance arenas. This
contributes to the debates surrounding the receiving side
of accountability regimes (Halliday & Carruthers, 2009;
Neu et al., 2006) and how accountability targets react
to transparency – the core tenet of such regimes
(Arnold, 2009b).
Who or what drives transnational accountability regimes?
In this paper, I attempted to deconstruct the ‘‘global’’
by looking into the detailed processes of co-optation
and coalition-building that drive the institution of a
transnational accountability regime. The case shows that
in attempting to understand the drivers and dynamics
of global accountability regimes, the traditional periph-
eral vs. core state or western vs. non-western divides
fail to have much analytical value when studying the
emerging multi-polar transnational governance context.
Rather, attention to communities and coalitions that
transcend local/global and central/peripheral boundaries
seems to be crucial to understanding the emergence of
such regimes. This further con?rms Halliday and
Carruthers’ (2009) claims about the importance of going
beyond typical fault lines in studies of global gover-
nance, and the necessity of paying attention to con?ict-
ing and competing agendas among or inside both
powerful western nations and the targets of such
accountability regimes.
Recent studies of regulatory emergence at the national
level have shown cases where a coalition of unlikely actors
is formed and how their interests are temporarily aligned
through different types of mediation, leading to the emer-
gence of a national regulatory regime (Djelic, 2013; Yandle,
1983; Yandle & Buck, 2002). This case illustrates how
ephemeral coalitions of unlikely actors with aligned inter-
ests and ideologies dispersed across divergent cultures and
geographies can organise themselves to drive transna-
tional accountability regimes. As shown, in studying such
coalitions, analyses should not only go beyond de?nitions
such as core/periphery and western/non-western, but
should also delve into the multiplicity of voices inside
one state. This is demonstrated, for example, through the
differences between the priorities of both the US
House/Senate committees and the UST. Attention should
be paid to which of these national voices are present at
the international level and what the implications of that
partial representation and actor mismatch are for transna-
tional accountability regimes.
In the increasingly multipolar and ?uid world of
transnational governance steered by alliances and coali-
tions, centres of power are negotiated and ?uid and bound-
aries between transnational core and peripheral actors are
mobile and porous (Djelic & Quack, 2010). More studies are
needed to better understand the processes for alliance for-
mation around shared interests and ideologies, and how
coalitions and counter-coalitions that transcend national
and cultural boundaries in?uence transnational account-
ability regimes.
Appendix A. List of interviewees
Organisation Position held at
the time of
GAPP
negotiations
Role in the
GAPP
negotiations
The OECD Senior Economist Observer
Temasek
(Singapore)
Director of
Global Strategy
Active
participant
Norwegian
Ministry
of Finance
Director
General in the
Ministry of
Finance Asset
Management
Department
(Former) –
responsible for
supervising
the Nowegian
SWF (GPFG)
Active
participant
Norwegian
Ministry
of Finance
Investment
Director
Active
participant
Norwegian
Ministry
of Finance
Director
General in the
Ministry of
Finance Asset
Management
Department
(current) –
responsible for
supervising
the Nowegian
SWF (GPFG)
Has taken
over the
overall
supervision
of GPFG
since 2011
New Zealand
Superannuation
Fund
Chief Executive Active
participant
Ministry of
Finance –
Alberta,
Canada
Assistant
Deputy
Active
participant
International
Monetary
Fund
Senior
Economist
Active
participant,
present in
the ?rst two
sessions
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