WASHINGTON – In remarks to staff on Friday, Kristalina Georgieva, managing director of the International Monetary Fund, denied allegations that she pressured officials to manipulate a report to reassure China when she was a senior World Bank official, and said she was deeply committed to data integrity and analysis, according to people familiar with the meeting.
“I do not agree with the consequences of my role and let me tell you very simply: It is not true,” she said, according to a transcript of her remarks.
A day earlier, an internal investigation by the World Bank concluded that Ms. Georgieva was among a group of senior World Bank officials who were pressuring the team conducting the annual Doing Business survey to increase China’s position in its 2018 report. The findings raised questions about Mr. Mrs. Georgieva, who was the Executive Director of the World Bank at the time, and led to a review by the IMF’s Ethics Committee
Friday’s meeting, which was largely virtual, was planned in advance to prepare IMF staff for its annual meeting with the World Bank.
Ms. Georgieva addressed the controversy at the beginning of the meeting, reiterating her public statement that she “fundamentally disagrees” with the report’s characteristics and insisted that the investigation would not be a distraction. She did not dispute the details of the allegations, but said asking staff to re-examine something was not the same as pressuring them to change data, methodology or results.
“Neither in this case, nor before, nor after, I put pressure on the staff to manipulate the data. I would ask the staff to do a check, a double check, a triple check, but never change, never manipulate what the data tells us, “she said. “Why? Because I believe so strongly in the value of reliable data and analysis, which leads to policy recommendations for the benefit of our members. For the benefit of the people.”
Ms Georgieva regretted that the investigation had caused unrest, but insisted it would not be a distraction.
“It is my responsibility that this does not interfere with the extremely important work we do,” she said. “So let’s focus on this work, and that’s the focus of the discussion we’re going to have today.”
According to a World Bank investigation conducted by the law firm WilmerHale at the request of the bank’s ethics committee, officials in 2017 were concerned about negotiations with members for a capital increase and were under pressure not to anger China, which is ranked 78th on the list of countries this year and is expected to decrease in the 2018 report.
The investigation found that Ms. Georgieva was “directly involved” in efforts to improve China’s ranking. At one point, according to the report, Ms. Georgieva punished the bank’s Chinese director for mismanagement of the bank’s relations with the country.
On Thursday, the World Bank said it was ending its annual business survey. The report has been used for years by developing countries to lure foreign investment and by international investors who decide which markets to explore.
In an email to staff Friday night, World Bank President David Malpas said he was “deeply disappointed” by what happened under the supervision of his predecessors and vowed to promote a healthier culture at the institution.
“It was worrying that many employees felt that raising concerns would have a negative impact on their well-being and career,” Mr Malpass said. “Threat, revenge and harassment are unacceptable and I am committed to defending against such behavior wherever we find it.”
The politicization of the study is an indication of how China’s economic power affects multilateral institutions and how long they will go to profit from the Chinese government. If China withdraws in protest, institutions such as the World Bank will lose credibility.
“China clearly wants to control the international account of its economy and its government’s political choices,” said Esuar Prasad, a former Chinese IMF director.
Republican lawmakers, who have criticized the IMF for allocating foreign exchange reserves to US adversaries, have called for a further investigation into what happened at the World Bank.
“As the World Bank’s largest shareholder, the United States must demand accountability,” Tennessee Republican Sen. Bill Hagerty said on Twitter on Friday. “Multilateralism cannot mean just doing everything necessary to get more money from communist China.”
A spokesman for Andy Barr of Kentucky, a leading Republican on the House Financial Services Subcommittee that monitors international development, said the Treasury Department should investigate how the IMF is helping China under Ms. Georgieva’s supervision. He cited $ 650 billion in foreign exchange reserves, known as special drawing rights, which the fund paid last month, which Republicans said should not have been given to countries like China, Russia and Iran.
“Given Ms. Georgieva’s leadership at the IMF, the Ministry of Finance should evaluate her actions on the eve of the IMF’s earlier approval for the SDR, its advocacy for assistance from new trust funds involving China and the current its work on the review of the IMF’s management, which has an impact on China’s influence in the fund, ” said Mr. Barr.
The Treasury Department, which serves as America’s liaison with the IMF and has significant voting powers, expressed concern about the allegations and said it was analyzing the findings of the investigation.