Worlds in Motion is a new series of articles, podcasts and webinars focused on legal, tax and regulatory issues important to sovereign wealth funds in a rapidly evolving global economic and geopolitical environment, produced by international law firm Baker McKenzie in partnership with IFSWF.
You can find out more about the Worlds in Motion Sovereign Series by watching this short video from our CEO, Duncan Bonfield.
1. Foreign Investment Review
The first topic covered in the series is foreign investment regulations, which are a core issue for IFSWF members when investing capital. In the first article, Strategies for Navigating the Global Foreign Investment Landscape, Baker McKenzie analyses the key challenges sovereign wealth funds face and appropriate strategies they can employ in the foreign investment review arena.
Along with this article, Baker McKenzie will chair a one-hour Foreign Investment Review Briefing webinar. This is an excellent opportunity to gain insights from leading experts on the foreign investment review landscape across major economies and how it relates to sovereign wealth funds.
The session will include contributions from:
- David Irvine AO, Chairman, Foreign Investment Review Board, Australia
- Cameron Price, General Counsel and Chief Risk Officer, Future Fund
- Grace Yuen, Legal Director, Canada Pension Plan Investment Board
- Samantha Mobley and Michael Kunstler, Partners at Baker McKenzie
2. Cross-Border Fraud and Asset Tracing in SWFs
Key highlights of the episode include:
- Fraud poses a particular threat to SWFs due to the vast sums of money they invest, and the fact that this is often spread over lots of different industries that the fund managers are not necessarily experts in. The risk profile of SWFs is therefore very broad when compared to other types of funds.
- The road to recovery of stolen assets is a long one – and a number of steps can be undertaken immediately after the fraud is discovered. There are two main buckets – (1) legal issues and (2) practical considerations – with the two running in parallel.
- The continuing development of crypto-assets offers a sophisticated new playing field for fraudsters, and the massive increase in digitalisation during the pandemic has only accelerated fraud concerns. SWFs are coming under greater scrutiny than ever before, especially in light of the growing emphasis placed on ESG factors. It is important that they pay close attention to the statements they make to investors, in order to avoid falling foul of fraudulent misrepresentation claims, for instance.
Listen using the player below.
3. Investment Profile and Tax Focus Areas for Sovereign Wealth Funds
In the aftermath of COVID-19 and the resulting low-yielding environment, sovereign actors are looking more than ever to real estate, infrastructure, private equity, private debt and other alternative assets for strategic investment opportunities. This trend brings with it important implications for the way sovereign wealth funds think about tax governance and structuring for these assets.
The podcast is accompanied by an article, Sovereign Investors: Navigating Tax Transparency in Europe, in which Baker McKenzie examines how the governments of Europe, which are under post-COVID-19 pressure to rebuild their balance sheets and ensure that businesses and investors pay their "fair" share of tax. As a result, new anti-tax-avoidance and disclosure measures are being prioritised across the continent.
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4. COP26 Key Takeaways for Sovereign Wealth Funds
Andrew Hedges and Kay She of Baker McKenzie discuss their experience and observations while on the ground in Glasgow for COP26 UN Climate Change Conference. They cover business imperatives and challenges affecting the global economy, and how sovereign wealth funds are well-positioned to influence and make an impact on broader sustainability goals and action plans. As discussions on climate-related issues evolve from commitments to execution in the recent COP26, Baker McKenzie unpacks some of the key takeaways relevant for sovereign wealth funds.
You can read more in Baker McKenzie's Client Alert Outcomes from Glasgow COP 26.
Listen using the player below.
5. Navigating Tax Transparency in Europe
In the aftermath of COVID-19 and the resulting low-yielding environment, sovereign actors are looking more than ever to real estate, infrastructure, private equity, private debt and other alternative assets for strategic investment opportunities.
In this second of two episodes, Baker McKenzie partners Pat McDonald (Chicago), James Burdett (London), Matt Legg (London), Guillaume Le Camus (Paris) and Diogo Duarte de Oliveira (Luxembourg) take a closer look at:
- how SWFs approach tax governance and structuring; and
- some of the European tax issues currently affecting SWF's investment activity.
Listen using the player below.
6. Compliance in a Changing Landscape
Internal governance is important to ensure that a sovereign wealth fund can manage its investment risk, attract appropriate funding partnerships and respond to increasing public scrutiny. When internal governance fails, the results can be catastrophic and very public, and will likely have significant financial and reputational consequences.
In this podcast, we explore what constitutes good internal governance for sovereign wealth funds and the key areas of risk, particularly given the urgency of some investments and lending arising out of the pandemic, and best practices for having proper internal governance in place as an integral part of managing risk.
Listen using the player below.