IMF chief, ex-World Bank head favoured China: Report

WASHINGTON • 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 Ms Georgieva - now managing director of the International Monetary Fund - and then-World Bank president Jim Yong Kim.

Ms Georgieva said she disagreed "fundamentally with the findings and interpretations" of the report.

The World Bank Group on Thursday cancelled 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 US Treasury Department, which manages the dominant US shareholdings in the IMF and the World Bank, said it was analysing the "serious findings".

WilmerHale cited "direct and indirect pressure" from senior staff in Mr Kim's office to change the report's methodology to boost China's score. It said Ms Georgieva and a key adviser, Mr Simeon Djankov, 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 capital increase.

The World Bank in 2018 announced a US$13 billion paid-in capital increase that boosted China's shareholding stake to 6.01 per cent from 4.68 per cent.

China's ranking in the Doing Business 2018 report rose seven places to 78th after data methodology changes were made.

The report ranks countries based on their regulatory and legal environments, ease of business start-ups, financing, infrastructure and other business climate measures.

It comes nearly two years after Ms Georgieva took over as IMF chief, before the biggest global economic crisis in the fund's 76-year history prompted by the Covid-19 pandemic.

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, but found no evidence that any members of the World Bank's office of the president or executive board were involved in these changes.

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 investigation 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.

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".

Non-profit group Oxfam has welcomed the bank's decision to discontinue the Doing Business report, saying it had long encouraged governments to slash labour regulations and corporate taxes in order to improve their spot in the rankings.

REUTERS