The governments of Singapore and Abu Dhabi pledged yesterday that investments made by their sovereign wealth funds would be based solely on commercial grounds and that they would not use them for political gain.

The promise was made after the two governments met the US Treasury, which has become increasingly concerned about the potential for sovereign wealth funds to use their recent spate of investments in banks such as Citigroup and Merrill Lynch to gain political advantage.

The talks yesterday were the first part of a wide-ranging effort to lay down investment guidelines to ensure that the secretive funds do not abuse their shareholdings in some of the most important companies in the United States.

After the meeting, Henry Paulson, the Treasury Secretary, said: “The US welcomes sovereign wealth fund investment and looks forward to continuing to work with these two countries and others to support the initiatives under way at the IMF and OECD to develop best practices for sovereign wealth funds and recipient countries.”

In addition to investing solely for commercial reasons, the Government Investment Corporation of Singapore and the Abu Dhabi Investment Authority agreed to greater disclosure in areas such as their purpose, objectives and returns. They also agreed to put in place strong risk controls and to comply with the regulatory and disclosure requirements of the countries in which they invest.

In return, the US agreed not to oppose investment by sovereign wealth funds and to make the same information available to them as to any other potential investor.

Meanwhile, Dubai’s sovereign wealth fund, the Investment Corporation of Dubai (ICD), abandoned bid talks yesterday for the second time for Inmobiliaria Colonial, the debt-crippled Spanish developer. ICD had offered €1.9 billion (£1.5 billion) for Colonial’s profitable rental business and said that it would take on the bulk of the company’s €9 billion of debt, but talks broke down over terms for a bank refinancing.

Shares in Colonial, the second-largest Spanish property developer, slumped 25 per cent, leaving it with a market value of only €1.2 billion.

ICD’s bid depends on its banks, led by Goldman Sachs, Royal Bank of Scotland, Eurohypo and Calyon, agreeing to restructure of a €7.2 billion syndicated loan.

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