The European Commission will announce measures today to strip away some of the secrecy surrounding sovereign wealth funds in a move that could lead to a voluntary global code of conduct for the billions of pounds of government-controlled finance.

The proposal is an attempt to set out ground rules for the funds, which are increasingly taking large stakes in Western companies and have bailed out several major banks that had fallen victim to the sub-prime crisis.

The code is also designed to head off demands led by France’s President Sarkozy for more protectionist measures against the funds whose motives some believe are driven more by political than commercial imperatives.

Responding to these concerns, José Manuel Barroso, the Commission President, said this week: “We cannot allow nonEuropean funds to be run in an opaque manner or used as an implement of geopolitical strategy.”

He added: “Sovereign wealth funds offer opportunities. They are not a big bad wolf at the door. For example, the current financial turmoil shows that sovereign wealth funds can help stabilise financial markets.”

The Commission is proposing a set of principles for transparency, predictability and accountability that would apply to the funds as well as to donor and recipient nations. In practical terms, these could include an annual statement of a fund’s investments and assets, details on the size of its resources and information on any voting rights it exercises.

Gordon Brown and other European Union (EU) leaders discussed sovereign wealth funds at their mini Downing Street summit last month and they will examine the Commission’s plans at their Brussels summit next month. If the blueprint attracts sufficient support, the EU will push its plans within the International Monetary Fund and the Organisation for Economic Cooperation and Development.

Mr Barroso made clear this week, on a visit to Oslo, that he sees Norway’s sovereign wealth fund, which follows clear ethical guidelines and whose assets of more than €250 billion (£188.2 billion) are fuelled by the country’s oil and gas, as a model for others to follow. He told his hosts: “It is often seen as the gold standard of sovereign wealth funds. We would like some others to look at your example and move towards the rigorous standards that you are applying here.” Although the Commission, following pressure from the UK, Sweden and other more open European economies, has so far shied away from regulation, Mr Barroso has pointed to the possibility of legislation if the present approach does not produce sufficient transparency.

Some sovereign wealth funds are responding to the concerns being voiced about their activities. With assets of $200 billion (£100.9 million), China Investment Corporation confirmed this week that it is drafting a charter of principles indicating that it will be run on commercial lines and at arm’s length from the Government.

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