Face Time with Charlie McCreevy

(CNN) -- A legendary US investor steps to the plate to defend sovereign wealth funds, while the European Union proposed a voluntary code of conduct for governing their activities.

This week MME spoke to Charlie McCreevy a key EU Commissioner who is responsible for the Union's policy on the functioning of its internal market.

Before being appointed EU Commissioner for Internal Markets and Services - which serves 480m people across 27 countries - McCreevy served as Minister of Finance and Minister of Tourism and Trade.

John Defterios spoke to Charlie McCreevy about sovereign wealth funds.

(JD): Is it important for there to be a pan-European position on sovereign wealth funds?

(CC): Well, we think there should be actually a global position as much as just a European position but we have to start off somewhere and that has led us to the Commission document which we presented last week to the Commission and to the finance ministers.

What we would prefer is to have a more or less global understanding about this but starting off from an EU perspective

(JD): Is it important that this measure prevents individual member states in Europe from taking their own action -- for example France had big reservations about the SWFs?

(CC): I think the tone of the debate about SWFs is different in March 08 than it was in March 07. For the very simple reason that some people were portraying -- on both sides of the Atlantic may I say -- a SWF as some type of pariah but lo and behold the SWFs have stepped up to the mark and more or less, well I don't like to say ''rescued'' some very famous institutions, but at least were in a position to provide capital that was lost in this recent financial turmoil.

So, far from being looked upon as, I say ''pariahs'' as they were a year ago. I think people are now looking at it in a more balanced way and I think we've had a more balanced discussion now than we would have had one year ago.

(JD): That raises an interesting point. If it were not for the credit crunch would the European Union or Washington be as co-operative with the SWFs?

(CC): I leave that for interviewers and journalists such as yourself to debate but I think it was in America that some people started thinking about this in a fairly critical fashion and that pre-dated the financial turmoil and pre-dated the losses that have risen there from. I think that has led to a better debate.

Under the rules of the treaty we treat both investors within the EU and from outside the EU in the same way. We are open for business here in Europe and we want actual investment in Europe. And as we point out in our communication SWFs have been around for the best part of 50 years and without exception they have been long term investors, the best stockholder that you can have on your books.

But it has to be recognized that some member states of the EU and other countries -- not just in Europe -- have some concerns as to what might be the aspirations, or what might be the policy of some of the newer SWFs looking to the future. So, that's what has triggered this immediate debate. But we are putting forward some gentle principles that we think could be adopted both in the interests of the SWFs and indeed the interests of the investee countries.

(JD): In a speech in December you said you had a problem with transparency and governance with certain funds. Which specific funds did you have reservations about?

(CC): If the newer SWFs are the same as SWFs as in the past and operated in the same way they're a normal investor and they usually take a long term view and its just for the far profit motive that they're there. But some member states are concerned by some newer SWFs as to what might be the long term intention whether it would be outside the normal investor principles -- for profit -- or will there be some kind of political motivations. Now the experience for the last 50 years has all been very very positive and I readily understand the discomfort and the annoyance of some of the existing SWFs at being all lumped in the same group and why they are saying, ''Look, we never caused any difficulties, why are you singling us out now?''

But we have to be politically realistic about this. In some member states -- not all -- and with some political parties and some policymakers, there are these concerns. So, I think that our approach of trying to push forward the debate in a balanced manner and reaching some accommodation via say a code of conduct with some guiding principals is the best way forward for both the funds and for the member states

(JD): Due to this program I come in contact with a number of the SWF's in the Gulf and they don't know what greater transparency means. In your view what is greater transparency in this front?

(CC): As I said in the earlier part of this interview, perhaps the best way to approach this will be on a global basis. Let's tease out some general principals that will be acceptable to the funds and acceptable to most member states. In that regard the IMF and other bodies are involved in this. You might notice that the British PM some time ago has spoken about this.

We've asked some of the SWFs to go forth and develop some principles themselves and the OECD has been looking into how investee countries should treat SWFs. So, what we don't want to see happening is a tit for tat retaliation starting because that would be bad for everybody. I speak for the European Commission when I say we are open for investment wherever it may come from. But we have to recognize some of the political difficulties that some people have put forward. So I think that it's in everybody's interest to try and reach accommodations here.

(JD): What do you think of the DIC bid for a football club like Liverpool. Is that a transparent move?

(CC): Absolutely. In the United Kingdom, of course I'm not from the United Kingdom I'm from Ireland, some of the bigger clubs are owned by investors from all over the world. One of my children is an avid Liverpool supporter and the fans of Liverpool want that particular sovereign wealth fund to come and invest in Liverpool FC as opposed to the current investors and major shareholders in the club. That's an interesting aside to all this -- the ordinary fans of that club are very anxious for that particular fund to become their major shareholder there. Interesting thing I'd say. E-mail to a friend