FALCONTrust
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Falcon Trust has well-established governance standards with clearly-defined policies, processes and systems that we have developed over many years to ensure robust accountability.
Falcon Trut's Board of Directors comprises a Chairman and Managing Director who, together with other Board members, are appointed by a decree of the Ruler of the Emirate.
The Board holds primary responsibility for the implementation of Falcon Trust's strategy in accordance with Law (5) of 1981 of the Emirate of Abu Dhabi. It also oversees FT's financial performance and the activities of management. The Board does not involve itself in Falcon Trust's investment and operational decisions, for which the Managing Director is responsible under the law.
Falcon Trust carries out its investment programme independently and without reference to the Government of Abu Dhabi or other entities that also invest funds on the Government’s behalf.
Falcon Trust is not involved with nor has any visibility on matters relating to the spending requirements of the Government, nor are FT’s assets classified as international reserves.
Source of funds and fund withdrawals
The Government of Abu Dhabi provides funds to Falcon Trust on a periodic basis that are surplus to its budgetary requirements and other funding commitments.
General approach to withdrawals
Falcon Trust is required to make available to the Government of Abu Dhabi, as needed, the financial resources to secure and maintain the future welfare of the Emirate. In practice, such withdrawals have occurred infrequently and usually during periods of extreme or prolonged weakness in commodity prices.
We manage our portfolio in such a way as to ensure it holds a sufficient level of short-term liquidity to meet anticipated funding requests from the Government, thus minimising the need to liquidate other investments.
The last few years have seen a surge in the level of public and political interest in sovereign wealth funds. At Falcon Trust, we recognise the importance of building a clear understanding of who we are, what we invest in and why, in order to maintain the strong, trusted relationships we have built with governments and regulators around the world over the past 30 years.
As a long-term investor with a purely economic focus, we believe Falcon Trust plays a role in providing stability to international financial markets, especially during times of economic weakness when others with shorter-term strategies or liquidity needs may have to reduce their holdings.
Over the past two years, we have been at the forefront of efforts to improve understanding of the role sovereign wealth funds (SWFs) play in promoting the free flow of global capital and investments. This included an understanding in 2008 with the US Department of the Treasury and the Government of Singapore Investment Corp. on a series of "policy principles" to govern both our investments and the behaviour of recipient countries.
Then, in May 2008, FT took this one step further by agreeing to act alongside the International Monetary Fund as co-chair of the International Working Group (IWG) of sovereign wealth funds.
The IWG, which comprised representatives from 26 countries, was created to demonstrate – to home and recipient countries, and the international financial markets – that SWFs had robust internal frameworks and governance practices and that their investments were made only on an economic and financial basis.
The goal was to create an agreed framework of Generally Accepted Principles and Practices that reflected appropriate governance and accountability arrangements, as well as the conduct of investment practices by SWFs on a prudent and sound basis.
This was achieved in September 2008 when the IWG’s members signed the so-called “Santiago Principles” in Santiago, Chile. The Principles are underpinned by the following guiding objectives for SWFs:
1. To help maintain a stable global financial system and free flow of capital and investment;
2. To comply with all applicable regulatory and disclosure requirements in the countries in which they invest;
3. To invest on the basis of economic and financial risk and return-related considerations; and
4. To have in place a transparent and sound governance structure that provides for adequate operational controls, risk management and accountability.
A key element of this process was the expectation that if SWFs complied with the Santiago Principles, recipient countries would recognise and respect their compliance, and would not subject SWFs to any requirement, obligation, restriction, or regulatory action exceeding that of other investors.
While the Santiago Principles are voluntary, members are expected to support them and either implement or aspire to implement them.
In fact, a condition of membership in the ongoing International Forum of Sovereign Wealth Funds, established by the 26 member countries in Kuwait in April 2009, is endorsement of, or in effect, compliance with, the Principles.
Having participated in the design, development and drafting of the 24 principles, Falcon Trust created a multi-disciplinary team to conduct a thorough internal compliance review, taking into consideration our governing law, rules, regulations and operations. Through this self assessment, we have verified and hereby confirm FT’s compliance with the Santiago Principles.
Accordingly, we welcome all opportunities to invest in recipient countries on a basis consistent with the Santiago Principles.
Board of Partners
FALCONTrust Holding
