Norway Sold 'nuclear' Bae Stake

The Norwegian government has sold its stake in BAE Systems, Britain's biggest military contractor, and six other global arms manufacturers because of their alleged involvement in producing nuclear weapons, it emerged yesterday.

The Norwegian government pension fund, at £110bn one of the world's largest, said yesterday it had sold its stocks in BAE and the six others late last year on the recommendation of its ethics council.

The fund, formerly known as the petroleum fund and used to invest Norway's oil and gas wealth in overseas equities and government bonds, said it had disposed of investments worth 3.3bn crowns (£290m) in BAE, Italy's Finmeccanica, France's Safran and US groups Boeing, Honeywell, Northrop Grumman and United Technologies.

A BAE spokesman declined to comment on the decision, which the fund's ethics council said stemmed from the British group's 37.5% stake in the European missile-maker MBDA.

The Norwegian fund's advisers cited Jane's Air Launched Weapons magazine, saying MBDA was producing the ASMP-A "nuclear warhead air-to-surface missile" for the French armed forces, with deliveries to be completed in 2008.

The ethics council admitted: "It is not clear whether BAE and Finmeccanica (a 25% stakeholder) play an active role in the development and production specifically of ASMP-A other than being partners in MBDA."

But, according to documents posted on the finance ministry's website, this is "not decisive" as both companies are active owners of MBDA and "thus directly contribute to the production of key components to nuclear weapons".

BAE also declined to comment on the size of the fund's holding in the company, which ranks 30th in the FTSE 100 and has a 43% overseas ownership. It is understood to be tiny.

Industry sources disputed BAE's involvement in nuclear arms production through MBDA or any other activity. But the finance ministry said the UK firm declined to say in a letter to Norges Bank, the country's central bank and fund administrator, whether it was involved or not.

MBDA's other big stakeholder, EADS, which owns 37.5%, has already been excluded from the fund because it "probably" produces cluster weapons.