Georgieva pressured World Bank workers to favor China in report – ethics inquiry

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International Monetary Fund (IMF) Managing Director Kristalina Georgieva delivers remarks at a closing press conference of the International Monetary Finance Committee, the 2019 IMF and World Bank Annual Meetings of Finance Ministers and of Bank Governors, in Washington, U.S., October 19, 2019. REUTERS / Mike Theiler / File photo

  • IMF Director Georgieva, then CEO of the World Bank, involved in the investigation
  • Georgieva rejects the conclusions
  • The Treasury says it has studied “serious results”

WASHINGTON, Sept. 16 (Reuters) – World Bank executives, including then-managing director Kristalina Georgieva, have put “undue pressure” on staff to improve China’s ranking in “Doing Business” report 2018 ”of the bank, according to an independent investigation published Thursday.

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 ruling of Georgieva – now chief executive of the bank. International Monetary Fund – and then World Bank President Jim Yong. Kim.

Georgieva said she did not “fundamentally agree with the findings and interpretations” of the report and had informed the IMF’s board of directors.

The World Bank Group on Thursday quashed the entire “Doing Business” report on the business climate, saying internal audits and the WilmerHale investigation had raised “ethical issues, including the conduct of former officers of the Board of Directors, as well as current and / or former staff of the Bank. “

The US Treasury Department, which manages dominant US holdings in the IMF and World Bank, said it was analyzing what it called “serious findings.”

WilmerHale’s report cited “direct and indirect pressure” from senior executives in Kim’s office to change the report’s methodology to boost China’s score, and said it likely happened under its direction.

He said Georgieva and a key adviser, Simeon Djankov, had pressured staff to “make specific changes to China’s data points” and improve its ranking at a time when the bank sought support from China for a significant capital increase.

Kim did not respond to a request for comment. Djankov could not be reached immediately.

China’s ranking in the “Doing Business 2018” report, released in October 2017, increased by seven places to 78th place after changes to the data methodology, compared to the initial draft report.

The Doing Business report ranks countries according to their regulatory and legal environment, ease of starting a business, financing, infrastructure and other business climate measures.

“SERIOUS FINDINGS”

The report comes nearly two years after Georgieva took over as IMF chief executive, shortly before the biggest global economic crisis in the Fund’s 76-year history, sparked by the COVID-19 pandemic.

The US Treasury is analyzing the “serious results” of the WilmerHale report, Treasury spokeswoman Alexandra LaManna told Reuters. “Our primary responsibility is to preserve the integrity of international financial institutions.

The WilmerHale report also cited pressures related to the data used to determine the rankings of Saudi Arabia, UAE and Azerbaijan in the ‘Doing Business 2020’ report released in 2019, but found no evidence. that members of the office of the president of the World Bank or the board of directors were involved in these changes.

Saudi Arabia climbed 30 places to 62nd place in the “Doing Business 2020” report.

“In the future, we will work on a new approach to assess the business and investment climate,” the World Bank said.

WilmerHale said he was hired by the lender’s International Bank for Reconstruction and Development in January to examine the internal circumstances that led to the irregularities in the data. He said the bank supported the investigation, but was completely independent.

INCREASE IN CAPITAL

The report says the effort to improve China’s ranking came at a time when the bank’s management was “consumed with sensitive negotiations” over a major capital raise and China’s disappointment at a score below expectations.

Georgieva told WilmerHale investigators that “multilateralism was at stake and the Bank would have ‘very serious problems’ if the campaign missed its targets,” the report said.

The World Bank announced in 2018 a $ 13 billion paid-up capital increase that raised China’s stake to 6.01%, from 4.68%.

WilmerHale said Georgieva went to the home of a “Doing Business” official to pick up a hard copy of the final report reflecting the changes that have improved China’s ranking, and thanked the employee for helping to “solve the problem”.

The report said a “toxic culture” and “fear of retaliation” surrounded the Doing Business report, and members of this team “felt they could not challenge an order from the Bank’s president or CEO. without risking their job “.

Nonprofit group Oxfam hailed the bank’s decision to end the Doing Business report, saying it has long encouraged governments to reduce labor regulations and corporate taxes in order to improve their place in classification.

Former World Bank chief economist Paul Romer first expressed concerns about the integrity of the ‘Doing Business’ report in 2018, saying Chile’s ranking may have been biased against the socialist president of the time, Michelle Bachelet. Romer left the bank shortly after his comments.

Reporting by David Lawder and Andrea Shalal Editing by Marguerita Choy and Heather Timmons

Our Standards: The Thomson Reuters Trust Principles.

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