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WASHINGTON (AP) – World Bank cancels major report on global trading conditions after investigators found bank executives pressured staff members to change data on China and some other governments .
The bank announced Thursday that it would end “Doing Business†following an investigation triggered by internal reports into “data irregularities†in its 2018 and 2020 editions and possible “ethical issues†involving the 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 then CEO Kristalina Georgieva and a of his advisers, concluded an investigation by Washington law firm WilmerHale for the bank. .
Georgieva, now director of the International Monetary Fund, said she did not agree with the findings.
“I fundamentally disagree with the findings and interpretations of the data irregularities investigation with respect to my role in the World Bank’s Doing Business 2018 report,” Georgieva said in a statement.
The World Bank, headquartered in Washington, is one of the world’s largest sources of development finance. “Doing Business,†which examines taxes, red tape, regulations and other business conditions, is cited by some governments in an attempt to attract investment. It ranks countries based on factors such as how easy or cumbersome it is to register a business, legally enforce a contract, resolve bankruptcy, have an electrical connection, or a building permit.
Timothy Ash, senior emerging market sovereign strategy strategist at fixed income manager BlueBay Asset Management, said he “cannot overstate” the importance of the Doing Business report for banks and companies trying to invest. ‘assess the risks in a particular country.
“Any quantitative country risk model has built that into the ratings,†he said. “Money and investments are allocated on the back of this series.”
He added that if an analyst at a bank or a rating agency had done what is alleged, “I bet he would be fired and be subject to a regulatory investigation.”
China has attempted over the past two decades to increase its influence over international institutions, including the IMF, the World Health Organization and their policies.
The changes in the 2018 report follow lobbying from China for higher rankings and precede a World Bank campaign to raise capital in which Beijing is expected to play a “key role,” according to the report. China is the bank’s third largest shareholder after the United States and Japan.
Changes made by analysts who prepared the 2018 report raised China’s ranking seven places to 78th, according to the report. Other changes affected the rankings of Azerbaijan, United Arab Emirates and Saudi Arabia.
A senior director of the World Bank admitted that the management of “Doing Business” had made changes to “push data in a certain direction to accommodate geopolitical considerations,” the report said. He said Georgieva thanked him for doing “his part for multilateralism. The senior director interpreted this to mean “do not anger China” during the capital increase negotiations, according to the report.
World Bank researchers knew the changes “were inappropriate,” but they “expressed fear of retaliation” from Georgieva’s aide Simeon Djankov, according to the report.
The Chinese Foreign Ministry expressed the hope that the World Bank will “conduct a thorough investigation” to “better maintain the professionalism and credibility” of “Doing Business”.
“The Chinese government attaches great importance to optimizing the business environment,” ministry spokesman Zhao Lijian said.
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World Bank survey: thedocs.worldbank.org/en/doc/84a922cc9273b7b120d49ad3b9e9d3f9-0090012021/original/DB-Investigation-Findings-and-Report-to-the-Board-of-Executive-Directors-September-15-2021. pdf
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