IMF’s Georgieva wins some European backing as board debates her future

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Economy9 minutes ago (Oct 08, 2021 09:15PM ET)

(C) Reuters. FILE PHOTO: World Bank Chief Executive Officer Kristalina Georgieva speaks at the annual session of China Development Forum (CDF) 2018 at the Diaoyutai State Guesthouse in Beijing, China March 25, 2018. REUTERS/Jason Lee/File Photo

By David Lawder and Andrea Shalal

WASHINGTON (Reuters) -Some European governments on Friday backed Kristalina Georgieva to remain International Monetary Fund managing director as the IMF board debated her alleged role in a World Bank data-rigging scandal, people familiar the matter said.

A French finance ministry source told Reuters that France planned to voice support for Georgieva at the board meeting. Britain, Germany and Italy were also expected to back Georgieva, another source briefed on the matter said.

Officials at the French, British and German embassies in Washington had no immediate comment. The Italian embassy did not immediately respond to request for comment.

But hopes for the board to reach consensus quickly on her future at the global crisis lender appeared to be fading amid uncertainty over the U.S. position. An IMF executive board meeting continued for hours behind closed doors.

Some officials wanted more time to review documents and discrepancies between accounts by Georgieva and the WilmerHale law firm, people familiar with the effort said.

WilmerHale’s investigation report prepared for the World Bank board https://thedocs.worldbank.org/en/doc/84a922cc9273b7b120d49ad3b9e9d3f9-0090012021/original/DB-Investigation-Findings-and-Report-to-the-Board-of-Executive-Directors-September-15-2021.pdf alleged that when Georgieva was World Bank chief executive in 2017, she applied “undue pressure” on bank staff to make data changes to the flagship “Doing Business” report to boost China’s business-climate ranking.

The IMF board was reviewing the claims and this week conducted lengthy interviews of both Georgieva and lawyers from WilmerHale.

Georgieva has strongly denied https://www.skdknick.com/wp-content/uploads/2021/10/2021.10.06-Statement-of-Kristalina-Georgieva-to-IMF-Executive-Board.pdf the allegations. Her lawyer claims https://www.reuters.com/business/imf-chief-georgievas-lawyer-claims-data-probe-violated-world-bank-staff-rules-2021-10-07 that the WilmerHale probe violated World Bank staff rules in part by denying her an opportunity to respond to the accusations, an assertion that WilmerHale disputes.

VOICING SUPPORT

Georgieva also has received a statement of support https://allafrica.com/stories/202110010999.html from African finance ministers.

But the U.S. Treasury, an important IMF power, declined to comment on Friday.

Treasury spokesperson Alexandra LaManna said earlier this week that the department has “pushed for a thorough and fair accounting of all the facts” in the ongoing review. “Our primary responsibility is to uphold the integrity of international financial institutions,” she said.

The IMF chief has traditionally been chosen by European governments, with the U.S. administration nominating the World Bank’s president.

France in 2019 backed Georgieva, a Bulgarian economist who has served in senior European Commission posts, as a compromise candidate to break a deadlock over the successor to Christine Lagarde, now European Central Bank president.

ANNUAL MEETING CLOUDS

The IMF board deliberations occurred as the Fund prepares for its biggest policy event next week, the IMF and World Bank annual meetings in Washington. The issue is expected to dominate the meetings.

Current and former staff from both institutions said that no matter who is to blame for the altered data, the scandal has dented their research reputations https://www.reuters.com/business/world-bank-imf-face-long-term-damage-after-data-rigging-scandal-2021-10-04, raising critical questions over whether that work is subject to member country influence.

Anne Krueger, a former World Bank chief economist and IMF first deputy managing director, on Thursday argued in a blog post https://www.project-syndicate.org/commentary/world-bank-doing-business-scandal-by-anne-o-krueger-2021-10? that Georgieva must step down to restore the Fund’s credibility.

“Should Georgieva remain in her position, she and her staff will surely be pressured to alter other countries’ data and rankings,” Krueger wrote. “And even if they resist, the reports they produce will be suspect. The entire institution’s work will be devalued.”

IMF’s Georgieva wins some European backing as board debates her future

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