New Delhi (ABC Live India): The IMF’s Executive Board met today for an initial briefing from the Ethics Committee on the matter related to Managing Director Kristalina Georgieva’s alleged role in enhancing the performances of China, Saudi Arabia, the United Arab Emirates, and Azerbaijan (Doing Business 2020) in the World Bank’s Doing Business 2018 and Doing Business 2020 of as described in the Investigation’s Report.

The ABC Research team working on this recommends that ABC readers should go through the Investigation Report prepared by Washington D.C based law firm Wilmer Cutler Pickering Hale and Dorr LLP.

The Law firm submitted its investigation report titled Investigation of Data Irregularities in Doing Business 2018 and Doing Business 2020 to the World Bank, the publisher of Doing Business data yearly on September 15, 2021.

Following the report submitted to World Bank and under discussion in IMF.

 On January 20, 2021, the International Bank for Reconstruction and Development (“the Bank”) engaged our firm to review the internal circumstances at the Bank that contributed to the data irregularities identified in the Doing Business 2018 and Doing Business 2020 reports. To that end, we undertook to understand: (1) how improper changes to the data for China(Doing Business 2018) and Saudi Arabia, the United Arab Emirates, and Azerbaijan (Doing Business 2020) were effected; (2) who at the Bank directed, implemented, or knew about the changes to the data and how their direction or pressure manifested; and (3) what internal circumstances, whether related to policies, personnel, or culture, allowed for the changes to take place.¹

Building on investigative work undertaken by the Bank’s Office of Ethics and Business Conduct (“EBC”), our review has proceeded on two investigative tracks simultaneously: The first focused on the ethical aspects of conduct relating to Board officials and was conducted pursuant to the Code of Conduct for Board Officials; the second focused on potential misconduct by Bank staff members and was conducted pursuant to applicable Staff Rules and Directives.² Our investigation was supported by, but wholly independent from, the Bank.WilmerHale retained sole discretion as to the investigative measures necessary to conduct a thorough investigation. Over the course of our investigation, our team collected roughly five million documents from Bank employees; reviewed 80,000 of those documents most likely to contain relevant information; and interviewed more than three dozen current and former Bank employees. The findings, analysis, and recommendations set out in this document are those of WilmerHale alone. The factual findings in this document are well supported and substantially corroborated by the witness statements and documents collected in our review.³

FACTUAL FINDINGS

Doing Business 2018

Published on October 31, 2017, the Doing Business 2018 report was released at a pivotal moment for the Bank and its leadership: From mid-2017 to April 2018, Bank management was consumed with sensitive negotiations over its ongoing capital increase campaign. Among other issues complicating the process, there was concern that at least one key stakeholder would meaningfully reduce its commitment to the institution, and that other significant countries, including China, were apprehensive about how ownership shares at the Bank were going to be re-calculated in response to increased financial commitments.

Then-President Dr. Jim Yong Kim and then-CEO Dr. Kristalina Georgieva were overseeing the capital increase campaign, and, according to a then-Development Economics vice Presidency (“DEC”) manager, CEO Georgieva was engrossed in the effort’s success. Indeed, CEO Georgieva explained in her interview that multilateralism was at stake, and the Bank was in “very deep trouble” if the campaign miss edits goals. In his interview, PresidentKim described the significant tension she faced between managing the disparate expectations and objectives of key shareholders.

It was against that backdrop that the data irregularities pertaining to China occurred. Beginning as early as May 2017 and continuing through the Doing Business 2018 cycle, high-ranking Chinese government officials repeatedly expressed their concerns to President Kim and other senior Bank officials that the country’s ranking in the Doing Business report—78 in Doing Business 2017—did not accurately reflect its economic reforms. President Kim acknowledged the Chinese officials ‘concerns and responded that the report’s methodology might require an update, but also encouraged the Chinese officials to focus on enacting economic reforms that would boost the country’s ranking under the report’s current methodology. President Kim explained that this was the same response he gave to every country that complained to him about Doing Business. For her part, CEO Georgieva stated in her interview that it appeared that Chinese officials were convinced from their interactions with Bank staff members (particularly those in the China country management unit) that the country’s ranking would improve in Doing Business 2018.

In the month leading up to the publication of the report, outreach from senior Chinese officials to Bank leaders over the country’s ranking in Doing Business intensified. For example, President Kim discussed the report and China’s performance with a senior Chinese government official on September 12; the then-Executive Director (“ED”) for China met with members of the Bank’s East Asia & Pacific (“EAP”) Regional Office on September 14 to inform them that if China’s ranking improved “everyone w[ould] be relieved” (and he made a personal plea to this effect to President Kim privately); during the Bank’s annual meetings, another then-senior Chinese government official met with EAP leadership on October 13 to express his hope that the Doing Business report would “better reflect China”; and, on October 14, the same Chinese government official had dinner with CEO Georgieva, during which he emphasized CEO Georgieva’s role as “the responsible person” at the Bank to “ensure” that China’s reforms were acknowledged in the report.⁴

Contemporaneous with this outreach from China, key staff members from President Kim’s Office—presumably at President Kim’s direction—began contacting DEC management to inquire how China was “coming out” in the report. In September 2017, DEC management indicated to some of President Kim’s senior staff members that “[a]s of now it looks like [China’s] results will not be positive but not as bad [as] we initially thought. However, we don’t yet know by how much they will drop.” In response to that email, one aide to President Kim wrote to another aide in the President’s office, “I think I’m going to cry.”

In October 2017 there were several conversations between staff to the President, CEO Georgieva, and one of her senior advisors; and DEC and Doing Business leadership focused on China’s Doing Business 2018 ranking. On October 11, at the request of the Office of the President, the then-Senior Director for DEC sent a written briefing on the Doing Business 2018 report that included the final country rankings in which china dropped seven places from the prior year’s report to 85. In response, on October 14, one of President Kim’s senior staff members emailed the Senior Director for DEC to note that China was not “coming out OK” and inquired whether DEC had a plan to “address the chronic complaint” that China had voiced about the report. The Senior Director for DEC responded later that day that, though China had “improved in absolute terms,” its relative ranking had dropped “because other countries in [its] ranking neighborhood did much better.”

Two days later, on October 16, 2017, a member of Doing Business leadership approved the final report (with China ranked 85) and authorized submission of the report to the printer to be published. That same day, the same staffer to President Kim who earlier expressed concern about China’s ranking received an email from another senior member of the Office of the President regarding China’s ranking: make sure that [the DEC leader] addresses the issue of where China will wind up in the rankings … Jim will not be happy if the explanation is not clear, and also if there is not a plan to manage the political side of it.

Later that evening, the then-Chief of Staff to President Kim sent a meeting invitation to the then-Senior Director for DEC, as well as to staff members in the Office of the President and Office of the CEO, with the subject line “Meeting on Doing Business.” The meeting would be held the next day, October 17, 2017, at 12:00 p.m. in the Chief of Staff’s office in the President’s office suite.⁵ The invitation included a note from the Chief of Staff to the Senior Director for DEC asking him to “[k]indly bring Preliminary Doing Business Ranking.” The Senior Director for DEC forwarded the invitation to a manager on the Doing Business team.

The next day, October 17, 2017, the Chief of Staff and another senior staffer to President Kim met with DEC and Doing Business leadership in the President’s office suite. During the meeting, the President’s aides raised the issue of how to improve China’s ranking in the report. Doing Business leadership believed that the concern was coming from PresidentKim directly. The group discussed methodological changes to the report that might boost China’s ranking, including by incorporating data from Taiwan, China, and/or Hong Kong SAR, China into China’s data.⁶ According to a Doing Business manager, DEC and DoingBusiness leadership conveyed to the Presidential staff members that the data for China was accurate and should be published as calculated by the Doing Business team.  Nevertheless, President Kim’s aides directed the DEC and Doing Businessleadership to simulateChina’s score if data for Hong Kong SAR, China was integrated into the existing data for China. Following the meeting, Doing Business leadership, in turn, instructed the Doing Business team to recalculate China’s numbers by adding in data from Hong Kong SAR, China; e-mail communications from Doing Business leadership to the Doing Business team explain that the direction came from the “senior management” of the Bank.⁷

The following day, October 18, 2017, the same staffer to President Kim who initially expressed concern about China not “coming out ok” in the Doing Business rankings, sent an encrypted email message to Doing Business and DEC leadership, and copying the Chief of Staff, asking what China’s ranking would be if data for Macao SAR, China was also added into China’s calculation in addition to data for Hong Kong SAR, China. A Doing Business leader responded that the Doing Business team did not collect data for Macao SAR, China, and therefore, could not incorporate that data into China’s score. But the Doing Business leader also noted that by incorporating Hong Kong SAR, China’s data, China’s ranking in Doing Business 2018 would rise to 70, which was eight spots higher than the previous year. The Doing Business leader indicated that the then-Senior Director for DEC had signed off on integrating Hong Kong SAR, China’s data into China’s data, and that the revised report would be sent to the printer. In response, this same aide to President Kim instructed the Doing Business leader that the issue was “still under discussion” and instructed the leader not to release the report for publication until everyone was “on the same page.”

At that point, CEO Georgieva became directly involved in efforts to improve China’s ranking. On the afternoon of October 18, CEO Georgievaconvened a meeting in her office with the then-Country Director for China, and members of DEC and Doing Business leadership.  During that meeting, CEO Georgieva represented that she was now overseeing the issue. She explained to Doing Businessleadership that they could not incorporate Hong Kong SAR, China’s data into China’s data for political reasons, and therefore needed a different solution. A member of Doing Businessleadership suggested that one way to raise China’s ranking would be to alter the methodology and use the higher scoring of the two cities included in China’s data (Beijing and Shanghai) rather than a weighted average as was typically used for countries with data collected from two cities; CEO Georgieva instructed this employee to run a simulation using that strategy and to report back.

During this same meeting, CEO Georgieva also chastised the Bank’s then-Country Director for mismanaging the Bank’s relationship with China and failing to appreciate the importance of the Doing Business report to the country. The Country Director suggested the large majority of reforms in the report. Nevertheless, on three topics, Azerbaijan’s reforms were “frozen,” or not counted, in the final version of Doing Business 2020 at the direction of Mr. Djankov.¹³ Indeed, Mr. Djankov confirmed in his interview his skepticism of the Azeri government and asserted his view that the decision to omit the reforms was the correct one. The changes reduced Azerbaijan’s score by nearly two points, dropping it from the Top Improvers list.

During this same meeting, CEO Georgieva also chastised the Bank’s then-Country Director for mismanaging the Bank’s relationship with China and failing to appreciate the importance of the Doing Business report to the country. The Country Director suggested that he meet with the then-Chinese ED to gauge how the country would react to a possible drop in the rankings. CEO Georgieva approved the outreach, and, shortly after, the Country Director and another EAP employee met with the ED for China and inquired how the country would respond to a drop in the rankings. The ED responded that China would not be pleased if the country’s ranking dropped.

The following day, October 19, 2017, the then-Senior Director for DEC emailed CEO Georgieva to inform her that the methodological change discussed in her office of using the best data of the two cities would not be feasible. While the change would increase the ranking for China, it would also, in turn, increase the rankings of other peer countries. Therefore, the Senior Director for DEC wrote to CEO Georgieva:

In light of the fact that we have considered several alternatives to recasting the data, and found none of them satisfactory, I suggest we go back to Plan A, which is to present the actual Doing Business numbers, and have an extensive explanation about how China has made substantial progress on a number of indicators (as documented in the report) but that, through no fault of their own, the countries in their ranking neighborhood did exceptionally well this year.

Later that day, a member of Doing Businessleadership was instructed that CEO Georgieva had asked Mr. Djankov to guide the report to final publication. Mr. Djankov worked with Doing Business management to identify changes to China’s data that would raise the country’s score and increase its ranking. A member of Doing Business leadership explained that—after convening a meeting with members of the entire Doing Business team to discuss the pressure from senior management to alter China’sdata—a small group of Doing Business leaders searched for data points for which there could be some “reasonable question” justifying a shift and that would cause the “least damage” to other data in the report if changed. For example, on the Legal Rights indicator, the Doing Business team had, as part of its initial assessment of a Chinese law relating to secured transactions, declined to award China the full complement of possible reform points. As part of the effort to increase China’sscore, the team reversed course and gave China more credit for this law. A Doing Business leader told us that this data point was an ideal vehicle to accomplish the objective because changing it could be justified in light of differing expert opinions on the effect of the Chinese law and because the law was unique to China, the change would not cause ripple effects for the data of other countries.

After identifying three such data points, the small group of Doing Business team leaders unlocked the report’s underlying data tables and executed the changes. The findings of the DEC review confirm this series of events. As concluded by the DEC Review,⁸the three changes affected the Starting a Business, Legal Rights – Getting Credit, and Paying Taxes indicators. The modifications, for example, reduced the amount of time necessary to comply with various regulations, which, in turn, boosted China’s score. These changes boosted China’s score by nearly a point and increased its ranking by seven places to 78,

the same ranking that the country had in Doing Business 2017. A member of the Doing Business leadership then sent the proposed changes to the three data points to Mr. Djankov, who wrote in response, “Excellent work. Please go ahead with report publication.”⁹

The following day, on October 20, 2017, the then-Senior Director for DEC emailed CEO Georgieva to inform her that he could “live with” the “technical solution” that had been found by Doing Business leadership and Mr. Djankov. CEO Georgieva responded in an email to him to “wrap this up” and come by her office. In his interview, the Senior Director for DEC ultimately acknowledged that the Doing Business leadership made “judgment calls” to push the data in a certain direction to accommodate geopolitical considerations. He explained that when he went to meet with CEO Georgieva, she thanked him for doing his “bit for multilateralism.” The Senior Director for DEC interpreted her comment to mean not angering China during the sensitive capital increase negotiations affecting the Bank’s future.

A week later—during the weekend of October 28-29, 2017—CEO Georgieva visited the home of a Doing Business manager to retrieve a physical copy of the report with the aforementioned data changes incorporated. During the conversation in the manager’s driveway, report and thanked the Doing Business manager for helping “resolve the problem” with China’s ranking. During her interview, former CEO Georgieva said that this was the first and only time she had ever visited this employee at the employee’s home. She further stated that she could not recall why she felt it was necessary to visit the employee’s home personally rather than have the report delivered to her at work during business hours.

A few days later, on October 31, 2017, Doing Business 2018 was published. In the report, China was ranked at 78—the same ranking it held in Doing Business

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