Monday Market Musings >>> Did the World Bank Mislead the World with Their Reports?
-Kristalina Georgieva Picture Credits: World Bank website
The World Bank has issued a statement confirming that it will stop the publication of its annual “Doing Business” economic report. This was because after an independent investigation was conducted by the law firm WilmerHale on the report, it unraveled that the rankings of China and Saudi Arabia had been pushed up after “undue pressure” on staffers by bank leaders.
The investigation report by WilmerHale found that the previous CEO of the World Bank, Kristalina Georgieva, had urged the Doing Business team to “change the report’s methodology” in 2017 or “make specific changes” to data to inflate China’s ranking in 2018. At the time it was said that Georgieva was in negotiations with China over a capital increase campaign.
The investigation concluded that Georgieva was “directly involved” with improving China’s ranking in the report. The investigation also reported that Georgieva “chastised the Bank’s then-Country Director for mismanaging the Bank’s relationship with China and falling to appreciate the importance of the Doing Business report to the country”.
Following the pressure applied by Georgieva, the Doing Business team had increased China’s rank by seven places to 78th in the world. The leaders of the Doing Business team had to give China more “credit” by identifying data points they could control and change, and they did so by acknowledging and granting credit for China passing a secured transaction law according to WilmerHale.
Kristalina Georgieva who has left the World Bank and is now the managing director of the International Monetary Fund (IMF) has commented that she disagrees “fundamentally with the findings and interpretations of the investigation of Data Irregularities as it relates to my role in the World Banks Doing Business report of 2018”.
-World Bank Headquarters Picture Credit: World Bank website
This revelations made through the investigation has also sparked the IMF to take action. The IMF Executive Board has requested the ethics committee to review the investigation conducted by WilmerHale. The ethics committee will then report back to the Executive Board with their conclusion on the matter.
The investigation also revealed that there were irregularities in Saudi Arabia’s data in the Doing Business report as well. This occurred after Saudi officials expressed “displeasure” at where they ranked on the world charts in the 2019 report. This had then led some senior bank leaders, including one of the founders of the Doing Business report, Simeon Djankov, to advise the survey team to change the data so Jordan wouldn’t be placed first in the world rankings for the “Top improvers” list. The team had then added extra points to Saudi Arabia so that it ranked first in the “Top Improvers” list, replacing Jordan.
On the 16th of September, the World Bank group issued a statement confirming the discontinuation of the Doing Business report due to these startling revelations of data manipulation.
September 20th 2021 | 10:00 AM