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Norway's fund divests from Caterpillar ( CAT ) over ethical

concerns

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Senator Graham warns of potential US trade tariffs on

Norway

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Norway says fund's decisions are independent, not

politically

driven

(Edits headline)

By Gwladys Fouche

OSLO, Aug 29 (Reuters) - Norway's prime minister said on

Friday he had contacted U.S. Senator Lindsey Graham to try to

defuse a controversy over a decision by the Norwegian sovereign

fund to sell all its shares in construction equipment group

Caterpillar ( CAT ) on ethics grounds.

Norway's $2 trillion sovereign wealth fund, the world's largest,

said on Monday it had divested from Caterpillar ( CAT ) over ethical

concerns due to the company's supply to Israel of bulldozers

used in the occupation of Gaza and the West Bank.

Caterpillar ( CAT ) did not comment on the wealth fund's move.

Graham, an ally of President Donald Trump, said on Thursday

that Norway should reconsider its decision or risk facing new

U.S. trade tariffs on its exports or have visa travel

restrictions imposed on the fund's managers.

"Your decision to punish Caterpillar ( CAT ), an American company,

because Israel uses their product is beyond offensive," Graham

wrote on X. "I would urge you to reconsider your shortsighted

decision," he later added.

About 52% of the fund's assets, more than $1 trillion, were

held in the U.S. as of June 30, spread across equities,

Treasuries and real estate.

ARM'S LENGTH

Management of the assets is designed to be at arms-length from

the government, and the decisions on which companies to divest

from are made by the board of the central bank, which operates

the fund.

The Caterpillar ( CAT ) divestment was decided at the recommendation of

the fund's Council on Ethics, a public body set up by the

Ministry of Finance to check that firms in the portfolio of the

fund meet ethical guidelines set by Norway's parliament.

"Yesterday afternoon (Thursday), the prime minister informed

Senator Lindsey Graham about the organisation of the pension

fund via a text message," State Secretary Kristoffer Thoner of

Prime Minister Jonas Gahr Stoere's office said in a statement to

Reuters.

"The decision to exclude companies is an independent

decision made by the board of Norges Bank, in accordance with

the established framework," he added.

"This is not a political decision."

Graham confirmed he had received the message, Thoner said.

Graham's office did not immediately respond to a request for

comment.

The Norwegian fund, built from vast oil and gas revenues, is

invested in some 8,400 companies, owning 1.5% of all listed

stocks globally.

Some commentators in the Nordic country have asked whether,

given the uncertainties about economic policies under Trump,

there could be a risk to the fund's U.S. assets, such as asset

seizure or a forced debt swap.

Asked in April this year what he made of such scenarios, the

fund's CEO Nicolai Tangen said he did not see a credible risk of

asset seizure.