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Tuesday, August 9, 2022

The Doing Business ranking was terminated after allegations of interference by Kristalina Georgieva

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Gaston de Persigny
Gaston de Persigny
Gaston de Persigny - Reporter at The European Times News

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The ranking of the World Bank Doing Business, in the creation of which former Finance Minister Simeon Djankov also participated, was finally terminated by the institution after an independent report, which spoke of interference in the interpretation of the data by Kristalina Georgieva and her lobbying in favor of China. Simeon Djankov, Bulgaria’s former finance minister, also played a key role, the text said. Djankov denies having played a role in revising the rankings, and Georgieva denied asking him to join. But other participants in the events claim the exact opposite.

Georgieva, who is managing director of the International Monetary Fund, does not accept the conclusions of the World Bank’s independent internal audit of its role in the 2018 rating. “I have already held preliminary consultations with the IMF’s board of directors on this issue,” the statement said. her Bloomberg agency.

The assessment of Bulgaria in the annual Doing Business reports was regularly presented by Dnevnik. However, criticism of the methods used, and in particular the reporting of reforms, has become more frequent in recent years. The rating, which was due out this year, was revoked last summer due to irregularities in the methodology of the 2018 and 2020 reports.

In 2018, due to disagreement with the methodology, the chief economist of the World Bank Paul Romer left (he received the Nobel Prize in Economics the same year). Specific reasons and facts for the freezing of the reports and Romer’s resignation have not been stated to date.

On Thursday, the bank distributed the report to WilmerHale (the name by which the large law firm “Wilmer, Cutler, Pickering, Hale and Dor” is known), to which the International Bank for Reconstruction and Development (IBRD) referred on January 20, 2021. ). They asked to find out how the data in the Douing Business reports in 2018 and 2020 for China, Saudi Arabia, the United Arab Emirates and Azerbaijan came to be.

Teams at the office worked discreetly, collecting about 5 million documents. Nearly 80,000 of them, related to the case, were examined and interviews were conducted with over 30 current and former employees of the bank. The conclusions, analysis and recommendations in the report are only of WilmerHale, it does not deal with the qualities of Doing Business, but is one of the reasons for stopping the ranking, stated in the official announcement.

There were interviews with Kristalina Georgieva, who during the events was the CEO of the World Bank – a post created especially for her by the president of the bank Jim Yon Kim. Talks were also held with Kim, and attention was focused on the campaign to increase the capital of the World Bank, for which Georgieva was responsible. She herself explained that if the increase failed, the bank “would be in big trouble”. China’s involvement in this process was very important.

Kim was a surprise nomination for President Barack Obama for the post in the spring of 2012. The reason is that he is a doctor of medicine and anthropology, but he is not a financial expert, and he has to make decisions for billions of dollars. Kim is at the center of Beijing’s growing campaign in 2017 to change the methodology for the Doing Business report, because there have been signals that the country will go down several levels in its new edition.

Kristalina Georgieva began to insist on “concrete changes in the data set for China that will improve the country’s position.” Discussions began with ideas such as combining data on China with those in Taiwan (internationally, almost all countries continue to consider the island part of China) and the Hong Kong Special Autonomous Region and even Macau. Simeon Djankov was also invited to one of the meetings with Kim’s chief of staff, but the data show that he was not present.

Kristalina Georgieva took a personal look at the situation at the end of October 2017 and Simeon Djankov played a key role in finding a way to improve China’s rating, according to the law firm’s conclusions. To make sure everything was exactly as it should be, she even went to an employee’s home in person to pick up a freshly printed copy, the authors said.

In the description of the reasons why employees have corrected data at the last moment, the text reads:

“First, members of the Doing Business team said there was no one to seek support from the bank. Regarding the Doing Business 2018 report, employees were told that instructions to change data on China came from the top of management. . Officials felt they could not challenge an order from the president or CEO without risking their jobs. Regarding Doing Business 2020, Mr. Dyankov publicly threatened at a team meeting that he had contacts with the bank’s ethics committee and would find out if anyone complained about it. In this way, employees felt powerless to challenge irregularities with the data requested by a senior banking manager. “

Then, in a few paragraphs, there are even more serious accusations against Djankov – that almost everyone on the Doing Business team calls working with him “at least very problematic”, and some even talk about “emotionally devastating”. Some describe it as harassing people, instilling fear in the team, managing “terror and extortion”, the style was “psychotrorism”, creating a “toxic environment” and demonstrating pomp and non-diplomacy. None of the team dared to complain to the ethics commission until Djankov left the bank.

The World Bank’s statement on Thursday said the report was just one document among the ongoing audits and audits of Doing Business and the methodology applied. “In addition, because the internal report raised ethical issues, including the conduct of former board members and current and / or former bank employees, management referred the allegations to the relevant internal control mechanisms,” the statement said.

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  1. Quite an unfortunate anticlimax for the critically acclaimed GPI.

    A lot of ongoing research on the upcoming DB2021 project just suffered a huge set back, with this announcement.

    It remains to be seen how World Bank intends to retain it’s credibility in future performance ratings, following this major ‘integrity’ test.

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