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World Probe finds World Bank changed data to boost China ranking

18:55  17 september  2021
18:55  17 september  2021 Source:   aljazeera.com

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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.

a large building: The changes in the World Bank's 2018 'Doing Business' 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', investigators found [File: Thomas Peter/Reuters] © Provided by Al Jazeera The changes in the World Bank's 2018 'Doing Business' 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', investigators found [File: Thomas Peter/Reuters]

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.

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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.

Kristalina Georgieva sitting on a table: 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 (pictured) and one of her advisers, an investigation conducted by Washington law firm WilmerHale for the bank concluded [File: Remo Casilli/Reuters] © Provided by Al Jazeera 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 (pictured) and one of her advisers, an investigation conducted by Washington law firm WilmerHale for the bank concluded [File: Remo Casilli/Reuters]

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.

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Timothy Ash, senior emerging market sovereign strategy strategist at fixed income manager BlueBay Asset Management, said he “cannot overestimate” the importance of the Doing Business report for banks and businesses trying to assess risk in a particular country.

“Any quantitative model of country risk has built this in to ratings,” he said. “Money and investments are allocated on the back of this series.”

He added that if an analyst at a bank or rating agency had done what is alleged, “I wager they would be fired and would be subject to regulatory investigation.”

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.

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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.

The Chinese foreign ministry expressed hope the World Bank would “conduct a comprehensive investigation” to “better maintain the professionalism and credibility” of Doing Business.

“The Chinese government attaches great importance to optimising the business environment,” said a ministry spokesperson, Zhao Lijian.

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