On Sept. 15, a report published by law firm WilmerHale for the World Bank’s ethics committee showed that World Bank leaders had manipulated China’s rankings in the “Doing Business 2018” report. It has now come to light that a group of external advisors had submitted a review to the World Bank several weeks back, recommending that the organization take action to prevent countries from manipulating their scores.
The 84-page review, submitted by the external team, was assembled by the bank back in Dec. 2020 after internal audits showed data irregularities in reports of countries like Saudi Arabia, the United Arab Emirates (UAE), China, and Azerbaijan. The review warned about a “pattern of government efforts to interfere” in the scoring of countries in the Doing Business report during past years.
“The World Bank needs an introspection. It has been advocating country reforms for better governance, transparency, and practices. Now it has to use the prescription for its own reform,” Mauricio Cardenas, Columbia University professor and former Colombian finance minister who chaired the expert panel, said to Reuters.
The review states that it had come across “multiple” incidents where national governments exerted pressure on individual contributors of the Doing Business report to manipulate their country’s rankings. These contributors included accountants, lawyers, and other experts.
Staff from the World Bank confirmed to the review team that government officials had given instructions to the contributors. Even if there was no government pressure, the “perceived threat of retaliation” may have influenced the scores given by contributors, the review states.
The authors of the review also asked the World Bank to stop selling consulting services to governments aimed at increasing their rankings, pointing out that it constitutes a conflict of interest. The bank offers such services, called Reimbursable Advisory Services (RAS), in several countries, including those found to have been involved in manipulating data for the Doing Business report.
An internal audit report from Dec. 2020 showed that the bank management pressured nine staff members to manipulate 2018 and 2020 editions of the Doing Business index to present Saudi Arabia as the “most reformed” country globally. The staff was also forced to boost rankings of China and the UAE while dropping Azerbaijan from the top 10 list.
The WilmerHale report accused former World Bank chief Kristalina Georgieva, who at present heads the International Monetary Fund, of applying “undue pressure” to improve China’s rankings in the 2018 Doing Business report. The World Bank was seeking China’s funding support at that time.
In an interview with CNBC, World Bank president David Malpass stated that the report “speaks for itself” and promised to explore new ways to help countries improve their business environment. On Sept. 16, the bank discontinued the Doing Business report.
“Congratulations to @DavidMalpassWBG for the decision to publish this savage review and to eliminate the Doing Business rankings. The bigger question is how, if it is even possible, the Bank can eliminate the apparent corruption of the institution that the review documents,” Alex Cobham, CEO of UK-based advocacy group Tax Justice Network, said in a tweet.
Some investors are dismayed by the discontinuation of the Doing Business report, as it had been a critical component of their decision-making process for years.“The more I think about this, the worse it looks… Any quantitative model of country risk has built this into ratings. Money and investments are allocated on the back of this series,” Tim Ash at BlueBay Asset Management said to The Epoch Times.