World Bank with scandal closes its Doing Business rating after investigation
Tashkent, Uzbekistan (UzDaily.com) -- The World Bank will no longer release the legendary Doing Business report, which showed the ease of doing business in different countries. Not for nothing - the authors of the report are suspected of manipulation. What happened?
The scandal was sparked by an investigation by the American law firm WilmerHale, which was hired in January 2021 by the International Bank for Reconstruction and Development, one of the structures of the World Bank Group. The reason is the suspicion that the bank’s management edited the Doing Business reports, which were one of the most important reform metrics, especially in developing countries.
The detectives analyzed 5 million documents, including internal correspondence of bank employees, and collected oral evidence. What did the investigation show? The key conclusion is that the World Bank staff artificially changed the indicators of China, Saudi Arabia and Azerbaijan in the ratings of 2018 and 2020.
The investigation includes the current head of the IMF, Kristalina Georgieva, 68, as well as the former head of the World Bank, Jim Yong Kim, 61.
In 2017, the top management of the World Bank, led by Kim and Georgieva, launched a capitalization campaign. In particular, they tried to persuade China to increase funding for its structure.
China, in turn, was dissatisfied with the position in Doing Business: in the 2017 ranking, the country occupied only 78th place, which, according to the Chinese authorities, reflected their reforms poorly.
Investigators documented a series of meetings between Kim, Georgieva, and the World Bank in the Pacific and officials from China shortly before Doing Business 2018 (Fall 2017) was published. For example, during dinner with Georgieva, one of the officials said bluntly that he hoped that she would help "appreciate" China’s reforms.
Employees of Kim’s department at that time were actively interested in the country’s position from analysts who were working on the rating. It turned out that China lost seven positions compared to the previous edition, dropping to 85th place. On 16 October 2017, the report was already going to be sent to print, but in the evening of the same day, the head of Kim’s office asked to suspend the preparation of the rating.
The next day, the authors of the rating were invited to a meeting to discuss a possible improvement in China’s position. One of the suggestions was to include Hong Kong, which was fifth in the ranking, in the indicators. With such a decision, China would have taken 70th place. But, according to Georgieva, this was unacceptable for political reasons and in the end the idea was abandoned, deciding to improve the expert assessment of three separate reforms by the Chinese authorities. The revision allowed China to take 78th place in the 2018 ranking. In Doing Business 2021, the country was ranked 31st.
After the publication of the 2018 report, Georgieva visited one of the Doing Business managers outside of working hours. In parting, she said that it was "a very unusual year" and thanked for "solving the problem with China."
Georgieva denies the results of the investigation and "fundamentally disagrees with them."
Investigators at WilmerHale found no evidence that Kim explicitly ordered changes to the data on China. One World Bank manager said it was "clear that the aides in President Kim’s office were acting on his behalf."
Saudi Arabia, Azerbaijan and the "Uzbekistan Protocol"
Another key figure in the investigation is Simeon Dyankov, a Bulgarian economist, one of the authors of the concept of the Doing Business report, and a top manager of the World Bank in 2017-2019. He also played an important role in changing China’s performance and influencing the assessments of other countries.
In January 2019, during a visit to Saudi Arabia, Dyankov said that the country would show good results in the next ranking. Doing Business 2020 confirmed this claim: Saudi Arabia topped the list of the most advanced countries.
The investigation showed that this success has two explanations.
First, initially this rating was headed by Jordan, which, however, did not like the management of the World Bank in the region of the Middle East and North Africa. In a conversation with the team that prepared the report, Dyankov said bluntly that Jordan should be replaced by Saudi Arabia. According to one Doing Business analyst, Dyankov explained the solution to Jordan’s "social and economic problems" at the time. The authors were instructed to change the numbers and added a few points for Saudi value added tax reform.
Second, Saudi Arabia has been one of the main users of the World Bank’s advisory program for middle- and high-income countries. The country has funded many of these programs and the lack of progress in Doing Business could discourage the Saudi authorities from continuing to use the services of World Bank advisers.
Another method of artificially changing the rating of individual countries was the so-called "Uzbekistan Protocol" - an unspoken rule according to which the management of the Doing Business project could, at its sole discretion, ignore the reforms in individual countries. For the first time, this approach was used when assessing the indicators of Uzbekistan in one of the ratings, hence the name.
The "protocol" was invented personally by Dyankov. In 2019, Azerbaijan suffered from this: on the personal instructions of Dyankov, the authors of the report decided not to take into account three reforms, because of which the country lost several positions. The detectives could not figure out why Dyankov made such a decision.