IMF chief called out over pressure to favor China while at World Bank
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[September 17, 2021] By
Andrea Shalal and David Lawder
WASHINGTON (Reuters) - World Bank leaders,
including then-Chief Executive Kristalina Georgieva, applied "undue
pressure" on staff to boost China's ranking in the bank's "Doing
Business 2018" report, according to an independent investigation
The report, prepared by law firm WilmerHale at the request of the bank's
ethics committee, raises concerns about China's influence at the World
Bank, and the judgment of Georgieva - now managing director of the
International Monetary Fund - and then-World Bank President Jim Yong
Georgieva said she disagreed "fundamentally with the findings and
interpretations" of the report and had briefed the IMF's executive
The World Bank Group on Thursday canceled the entire "Doing Business"
report on business climates, saying internal audits and the WilmerHale
investigation had raised "ethical matters, including the conduct of
former Board officials, as well as current and/or former Bank staff."
The U.S. Treasury Department, which manages the dominant U.S.
shareholdings in the IMF and the World Bank, said it was analyzing what
it called the "serious findings."
The WilmerHale report
cited "direct and indirect pressure" from senior staff in Kim's office
to change the report's methodology to boost China's score, and said it
likely occurred at his direction.
It said Georgieva, and a key adviser, Simeon Djankov, had pressured
staff to "make specific changes to China's data points" and boost its
ranking at a time when the bank was seeking China's support for a big
Kim did not respond to a request for comment. Djankov could not be
China's ranking in the "Doing Business 2018" report, published in
October 2017, rose seven places to 78th after the data methodology
changes were made, compared with the initial draft report.
The "Doing Business" report ranks countries based on their regulatory
and legal environments, ease of business startups, financing,
infrastructure and other business climate measures.
The report comes nearly two years after Georgieva took over as IMF
chief, shortly before the biggest global economic crisis in the Fund's
76-year history, prompted by the COVID-19 pandemic.
The U.S. Treasury is analyzing "serious findings" in the WilmerHale
report, Treasury spokeswoman Alexandra LaManna told Reuters. "Our
primary responsibility is to uphold the integrity of international
The WilmerHale report also cited pressures related to data used to
determine rankings for Saudi Arabia, the United Arab Emirates and
Azerbaijan in the "Doing Business 2020" report published in 2019, but
found no evidence that any members of the World Bank's Office of the
President or executive board were involved in these changes.
[to top of second column]
International Monetary Fund (IMF) Managing Director Kristalina
Georgieva makes remarks during a closing news conference for the
International Monetary Finance Committee, during the IMF and World
Bank's 2019 Annual Meetings of finance ministers and bank governors,
in Washington, U.S., October 19, 2019. REUTERS/Mike Theiler/File
Saudi Arabia climbed 30 places to 62nd in the "Doing Business 2020" report
"Going forward, we will be working on a new approach to assessing the business
and investment climate," the World Bank said.
WilmerHale said it was hired by the lender's International Bank for
Reconstruction and Development in January to review the internal circumstances
that led to the data irregularities. It said the bank supported the probe, but
it was wholly independent.
The report said the push to boost China's ranking came at a time when the bank's
management was "consumed with sensitive negotiations" over a major capital
increase, and China's disappointment over a lower-than-expected score.
Georgieva told WilmerHale investigators that "multilateralism was at stake, and
the Bank was in 'very deep trouble' if the campaign missed its goals," the
The World Bank in 2018 announced
a $13 billion-paid in capital increase that boosted China's shareholding stake
to 6.01% from 4.68%.
WilmerHale said Georgieva visited the home of a "Doing Business" manager to
retrieve a hard copy of the final report that reflected changes that boosted
China's ranking, and thanked the employee for helping "resolve the problem."
The report said a "toxic culture" and "fear of retaliation" surrounded the Doing
Business report, and said members of that team "felt that they could not
challenge an order from the Bank's president or CEO without risking their jobs."
Nonprofit group Oxfam welcomed the bank's decision to discontinue the Doing
Business report, saying it had long encouraged governments to slash labor
regulations and corporate taxes in order to improve their spot in the rankings.
Former World Bank chief economist Paul Romer first voiced concerns about the
integrity of the "Doing Business" report in 2018, saying Chile's ranking may
have been biased against socialist then-President Michelle Bachelet. Romer left
the bank shortly after his comments.
(Reporting by David Lawder and Andrea Shalal; Editing by Marguerita Choy,
Heather Timmons, and Jon Boyle)
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