By Lynn Kan

SOVEREIGN wealth funds (SWFs) used to keep mum about what they did. They did not publish information on their assets, liabilities or investment strategies.

But in recent years, after bids by some SWFs and state-owned entities were rebuffed by Western countries, SWFs have acted to improve openness and allay fears about their stakes in foreign companies.

Singapore's Temasek Holdings and the Government of Singapore Investment Corporation (GIC) have also joined in.

Temasek released its first annual report in 2004 and GIC, last year.

But is the information they provide good enough?

Only so-so, according to a comparative study done by the Peterson Institute for International Economics, a Washington-based economics think-tank.

Its best practices scoreboard on SWFs is widely acknowledged as the first transparency and accountability report card for such entities.

Last year, Temasek was ranked 28 out of 44 funds, one rung above GIC, on its Truman SWF Scoreboard that was launched in 2007.

This ranking does not differentiate the funds according to the size of their portfolio or type, which refers to the source of funding - either from natural resources like oil, or non-commodity sources like fiscal revenue.

When such a distinction is made, Temasek and GIC fared worse.

Judged against SWFs not financed by natural resource revenues, Temasek is 14th out of 16 such funds.

When stacked against 12 large SWFs with at least US$100 billion (S$144 billion) worth of assets (at end-2007), it was in 10th place.

The Truman scoreboard uses 33 judging points to rank these government-controlled or government-owned funds seeking commercial returns.

These indicators are grouped under four categories: structure, governance, transparency and accountability, and investment behaviour.

And these are used to determine a fund's overall transparency and accountability.

The scoreboard's creator, researcher Edwin Truman, says the yet-to-be published 2009 scoreboard will take into account four components in the Santiago Principles and will drop some of the less important criteria.

The Santiago Principles, introduced last October, is a set of 24 generally accepted principles and practices for SWFs to accept voluntarily.

Contrast in findings

TRUMAN'S findings are in contrast to Temasek's top rank in another index, the Linaburg-Maduell Transparency Index (LMTI).

The 10-point LMTI was set up in mid-2008 and is updated quarterly on the website of the Sovereign Wealth Fund Institute.

Unlike the Truman scoreboard, its 10 points are based on what the creators feel would be important to the average person.

The Truman's 33 indicators, on the other hand, are based on whether at least one SWF adopts such a practice.

An LMTI creator, Mr Carl Linaburg, says the index is not meant to be 'an in-depth look at accountability'.

In its latest second-quarter 2009 listing, six SWFs topped the index with a perfect score of 10.

One of them is United Arab Emirates' Mubadala Development Company, which was 42nd in Truman's report.