The then-World Bank President Jim Yong Kim, then-Chief Executive Kristalina Georgieva (now Managing Director of the International Monetary Fund, and Georgieva’s aide, Simeon Djanko
The Doing Business report measures the regulations that enhance business activity and those that constrain it.
Probe finds World Bank changed data to boost China ranking
Investigators found that World Bank staff changed data to boost China’s ranking in the 2018 and 2020 ‘Doing Business’ report which gauges business conditions around the world.
The World Bank is cancelling a prominent report on business conditions around the world after investigators found staff members were pressured by the bank’s leaders to alter data about China and some other governments.
The bank said on Thursday it would discontinue “Doing Business” following an investigation prompted by internal reports of “data irregularities” in its 2018 and 2020 editions and possible “ethical matters” involving bank staff.
Staff members changed data on China to improve its ranking under pressure from the office of then-World Bank President Jim Yong Kim and from then-Chief Executive Kristalina Georgieva and one of her advisers, an investigation conducted by Washington law firm WilmerHale for the bank concluded.
Georgieva, now director of the International Monetary Fund, said she disagreed with the findings.
“I disagree fundamentally with the findings and interpretations of the Investigation of Data Irregularities as it relates to my role in the World Bank’s Doing Business report of 2018,” Georgieva said in a statement.
The World Bank, headquartered in Washington, is one of the world’s biggest sources of development funding. Doing Business, which looks at taxes, red tape, regulation and other business conditions, is cited by some governments in trying to attract investment. It ranks countries on factors such as how straightforward or burdensome it is to register a business, legally enforce a contract, resolve a bankruptcy, get an electrical connection or obtain construction permits.
China has tried over the past two decades to increase its influence over international institutions including the IMF, World Health Organization and their policies.
The changes in the 2018 report followed lobbying by China for a better ranking and came ahead of a campaign by the World Bank to raise capital in which Beijing was expected to play a “key role,” the report said. China is the bank’s third-largest shareholder after the United States and Japan.
Changes by analysts who prepared the 2018 report raised China’s ranking by seven places to No 78, according to the report. Other changes affected rankings of Azerbaijan, the United Arab Emirates and Saudi Arabia.
A World Bank senior director acknowledged the Doing Business leadership made changes to “push the data in a certain direction to accommodate geopolitical considerations,” the report said. It said Georgieva thanked him for doing his “bit for multilateralism”. The senior director interpreted that to mean “not angering China” during the capital increase negotiations, the report said.
The World Bank researchers knew the changes “were inappropriate,” but they “expressed a fear of retaliation” by Georgieva’s aide, Simeon Djankov, according to the report.
World Bank Cancels Flagship ‘Doing Business’ Report After Investigation
Probe faults leaders including Kristalina Georgieva, now IMF managing director, who disagrees with findings
Kristalina Georgieva, managing director of the International Monetary Fund (IMF) has denied influencing a report in China’s favour when she worked at the World Bank.
Georgieva served as chief executive officer of World Bank between January 2017 and September 2019 before moving to IMF.
The World Bank, on Thursday, discontinued the publication of the annual ‘Doing Business’ report that ranked countries according to the favourability of their business and investment climates after a review of data irregularities in 2018 and 2020.
The multinational lender said audits raised ethical concerns involving former board officials and staff.
“World Bank Group research informs the actions of policymakers, helps countries make better-informed decisions, and allows stakeholders to measure economic and social improvements more accurately,” the bank said.
“After reviewing all the information available to date on Doing Business, including the findings of past reviews, audits, and the report the Bank released today [investigation findings of the 2018 and 2020 irregularities], World Bank Group management has taken the decision to discontinue the Doing Business report.”
The development lender said it would work on a new approach to assess countries’ business and investment climates.
In its findings, World Bank cited Georgieva as having put staff under pressure to alter data related to China to boost its score.
“The changes to China’s data in Doing Business 2018 appear to be the product of two distinct types of pressure applied by bank leadership on the Doing Business team,” it said in the report.
It added that there was “pressure applied by CEO Georgieva and her advisor, (Simeon) Djankov, to make specific changes to China’s data points to increase its ranking at precisely the same time the country was expected to play a key role in the bank’s capital increase campaign.”
China’s ranking in the 2018 report should have been seven places lower at position 78 instead of 85. The 2018 Doing Business report was released in October 2017.
The probe was produced by the law firm WilmerHale, which was retained by the World Bank executive board’s ethics committee, the body responsible for ethical matters involving board officials.