Tonio Borg to divest of fund that has Swedish Match stock

There's no doubt that Big Tobacco is a must for any serious investment fund portfolio. But as it happens, Tonio Borg's own investment in the La Valette SICAV's sterling income fund (just over 2,000 units) has invested in sub-funds that include Imperial Tobacco and even Swedish Match, the company whose complaint to the European Commission prompted the OLAF investigation into John Dalli, the man Borg will replace as European Commissioner.

Tonio Borg's financial declarations

It's all in the small print, as the eagle-eyed observers from Corporate Europe Observatory - an NGO actively engaged in demanding ever greater transparency from the European Union - have discovered when analysing Borg's financial declarations. His declaration has already been scrutinised and approved by the EP's legal and parliamentary affairs committee. 

Investment fund in which future Commissioner #BorgEU participates holds Swedish Match stock vfm.com.mt/filebank/LVfin…(page 116) #tobaccogate — CEO (@corporateeurope) November 19, 2012

OPEN La Valette Funds annual statements [PDF]

Scroll down to page 116 of the voluminous 2011 financial statements of the La Valette Funds SICAV plc, and you will find where the money poured into their sterling income fund goes: the world over, from national banks to foodstuffs giants, but also two Imperial Tobacco funds - comprising close to 2.18% of the entire fund - and also Swedish snus producers Swedish Match, which comprises 0.36% of the fund.

Borg has told EUobserver the sums involved are "infinitesimal" and that he did not know what the fund did with his money.

The revelation was awkward enough for him to declare he will divest himself of the funds. "Last year I earned £90 [€112] from the fund, of which the sum indirectly derived from Imperial Tobacco bonds was in the region of £1.80," Borg said. "In spite of the absence of a conflict of interest and to demonstrate utmost good faith, I have given instructions so that this investment is disposed of," he added.

"I will not weaken the tobacco control directive in any way," he also said, referring to Dalli's draft bill, which had envisaged some tough measures, such as forcing cigarette makers to use plain packs covered in pictures of diseased lungs, before its author left his post.

Critics who cry foul should be warned. Before Big Tobacco became a codeword for 'entrapment' for those who suspect that John Dalli was set up in a bid to trip up the Tobacco Products Directive, the mere mention of Imperial Tobacco and Swedish Match in an investment sub-fund failed to ruffle any feathers. Then again, investors in funds do not get to choose where their money is invested; most of them do not even bother to see where the money actually goes.