Santiago Principles Vs. Truman Scoreboard

Ashby Monk

Back in 2007, SWFs found themselves under the intense glare of the international community, which was due in large part to some high-profile investments in Western financial services firms at the outset of the financial crisis (e.g. Citigroup) and the creation of some new, large SWFs (e.g. China Investment Corporation). And because few people knew much, if anything, about SWFs, this raised questions about their motives and operations and sparked the beginnings of protectionist rhetoric.

On cue, Edwin Truman of the Peterson Institute launched his now famous Scoreboard that ranked SWFs’ structure, governance, accountability, transparency and behavior. And, unfortunately for the funds, the results weren’t very flattering. In fact, that’s putting it mildly, as some of the biggest funds in the world, such as the GIC and ADIA, scored embarrassingly low (2.25 and 0.5, respectively, out of a possible 25).

Truman’s scoreboard seemingly catapulted him to the pulpit of what became a sort of ‘reform movement’ for SWFs. Indeed, facilitated by the IMF, the world’s biggest SWFs subsequently came together in the International Working Group of SWFs to consider how their operations could be improved to align them with international expectations. The outcome of these deliberations was the Santiago Principles, comprised of a series of (voluntary) principles and practices that amounted to a “best practice” mantra for SWF management, governance and design.

And now, he’s baaaack. And Truman’s new message isn’t going to comfort SWFs any more than his original one: he is apparently arguing that the Santiago Principles fall well short of international standards of best practice, as he defines them. At a recent conference on SWFs organized by Forrest Research (click here for an agenda and a link to Truman’s presentation), he said that a fund that achieves 100% compliance with the Santiago Principles (which, by the way, no fund has achieved) would represent only 76% compliance with his Scoreboard:

“This implies that full performance on the GAPP [Santiago Principles] would put an SWF near the top of the middle group on the SWF Scoreboard…The biggest weaknesses are with respect to accountability and associated transparency.”

But it’s not all bad; Truman seems to agree with a point that I made a few months back: the Santiago Principles may be weak and toothless, but they have actually been effective:

“…weak principles are more easily adopted, which is why we have seen so many SWFs attempt to become GAPP-compliant. In that sense, perhaps this was the right “starting point” for SWFs’ process of opening up; baby steps.”

I still believe that. And the increases in transparency at funds such as the GIC and ADIA seem to give further credence to this argument.

But, as Truman concludes, one of the big tests going forward will be whether the Santiago Principles can be improved and actually implemented. I agree that implementation is key here, and shouldn’t be too onerous. After all, we’re just asking the funds to implement the framework that they themselves came up with (remember that some of funds, such as Iran’s, are 0% compliant with the Principles…seriously). Why is this important, you ask? Why are the SWFs being singled out? I don’t have an easy answer to that. All I know is that the Santiago Principles were designed to guard against financial protectionism, and I think many would agree that open investing is in everyone’s interest.

7 Responses to “Santiago Principles Vs. Truman Scoreboard”

  1. 1 Victoria Barbary July 19, 2010 at 12:23 pm

    The thing is Ashby, is that all the Santiago signatories are in compliance with the principles, it’s just that only 9 of the 35 principles and sub-principles explicitly require public disclosure. The question is not, therefore, whether they are compliant or not, but whether external parties are able to tell the extent to which they are. It thus becomes a question of whether external parties (i.e. us) are prepared to take their word for it. Should this be the situation – now that is an interesting question – who should watch the watchers?

  2. 2 Ashby Monk July 19, 2010 at 3:15 pm

    Fair point, Victoria. I guess we’ll get a better sense for all of this once the IFSWF’s “assessment exercise” concludes. Thanks for reading…

  3. 3 Andrew Rozanov July 19, 2010 at 7:04 pm

    Hi Ashby, interesting and thought-provoking post, as always… But let me ask a similarly provocative question: what about the recipient country compliance with the OECD principles of open and non-discriminatory treatment of all foreign investors? I recall that, in the early days, Santiago Principles were supposed to be in some broader sense a quid-pro-quo compromise for Western governments adopting similar “best practices” on their part? How come there is complete and total silence on that? No objective third-party measures of compliance? At the very least, one needs to speak of the two developments in one breath, no?

  4. 4 Ashby Monk July 19, 2010 at 8:17 pm

    Of course you’re right, Andrew. I don’t mean to give the impression of being exclusively focused on policing SWFs’ behavior. The behavior of investment receiving countries is also integral to the investment equation. As I said in the post, we all want to preserve open markets here. I guess I need to go back to the OECD and see where they’ve got to on this…for now, you can read up on the information here:,3343,en_2649_34887_41807059_1_1_1_1,00.html.

  5. 5 Rien Huizer July 19, 2010 at 10:14 pm


    Interesting discussion here! The Principles are the product of a political (financial diplomacy) process and it depends on your analytical focus plus theoretical perspective how you look at them. As a tool for outsiders to assess governance they are useful, but highly incomplete (Truman is right). As a compromise (in a world systems theory perspective that tends to be popular among those who have a problem with first world-friendly globalization) between nationalist forces and a Centre-driven tendency to develop uniform and non-discriminatory standards conforming to a capitalis-democratic paradigm of economic governance they are probably exemplary: they can be easily complied with yet leave plenty of room to escape the kind of framing that could result in domestic embarrassment for SWF gvts.

    The points you made in your “big theoretical piece” about SWFs as a local response to global forces (not necessarily the more West-demonizing variant of the world systems theorists!)are basically in accordance with the evolution of SWF practice since the Santiago principles and it looks that that is unlikely to change.

    Maybe the SWF theorists that want more transparency are not happy with that and hence “want to improve”. Difficult to see what lever might be used to achieve that..

  6. 6 Roy December 31, 2010 at 12:44 am

    Does anyone know where I can find the rankings of the SWFs for all the years Truman has ranked them? For how many years has he ranked them already?

  7. 7 sara bazoobandi February 22, 2011 at 8:11 am

    Hi Ashby, thanks for the post, very useful. One question: do you know where could I find the competelt amended version of the scoreboard?

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This website is a project of Professor Gordon L. Clark and Dr. Ashby Monk of the School of Geography and the Environment at the University of Oxford. Their research on sovereign wealth funds is funded by the Leverhulme Trust and The Rotman International Centre for Pension Management.

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