Fate of IMF chief in the balance as fund's annual meetings set to begin

Kristalina Georgieva's position as managing director of the International Monetary Fund is in the balance after the lender's executive board met on Friday and Sunday to discuss allegations of data manipulation that determined the ranking of certain countries in an index while she was chief executive of the World Bank.

The latest meetings come after the IMF's board last week met Ms Georgieva and the law firm WilmerHale, which last month flagged the allegations of data manipulation in the World Bank’s Doing Business report.

A decision on Ms Georgieva may come as soon as Monday as the IMF and World Bank start their annual meetings, Bloomberg reported.

“To clarify details, the board met again with WilmerHale’s representatives and with the managing director. The board made further significant progress today in its assessment with a view to very soon concluding its consideration of the matter,” the IMF said in a statement late on Sunday. The fund reiterated its board is committed to a “a thorough, objective, and timely review".

The fund's board, which comprises 24 directors that represent its 190 member states, is divided about whether Ms Georgieva should stay in her position, with the US and Japan, the IMF’s two biggest shareholders, in favour of her stepping down, the Financial Times reported, citing people familiar with the matter. France, Germany, Italy and the UK are more supportive, aligning with China and Russia, the FT said.

In 2003, the World Bank launched its Doing Business rankings with the objective of measuring business regulations that enhance or constrain commerce in 190 countries. After data irregularities were reported internally in the 2018 and 2020 surveys, World Bank management discontinued the next Doing Business report and initiated a series of reviews and audits of the report and its methodology.

Ms Georgieva, 68, became head of the IMF in 2019 as her predecessor Christine Lagarde left to become president of the European Central Bank. A native of Bulgaria she became the first person from an emerging-market economy to lead the IMF since its inception. She joined the Washington lender at a tumultuous time — a sluggish global economy fraught by a trade war between the US and China, the uncertainty of Brexit, rising geopolitical tensions in the Middle East, and supporting countries through the Covid-19 pandemic by expanding the reserve assets of the fund, with $650 billion allocated to help states recover from the health crisis.

Should Ms Georgieva resign she would be the second IMF managing director to do so since the fund was founded in 1944 following the Great Depression. Dominique Strauss-Kahn stepped down amid accusations he had sexually attacked a housekeeper in a New York City Midtown hotel room. He was arrested but the charges against him were subsequently dropped because of doubts about his accuser's credibility. A separate civil suit was settled between Mr Strauss-Kahn and his accuser, for an undisclosed amount.

Ms Georgieva has refuted the allegations that she pressured World Bank staff to adjust data that determined the ranking of certain countries in an index while she worked there.

In a letter to the IMF's board last week, Lanny Breuer, a lawyer with Covington & Burling representing Ms Georgieva, said WilmerHale violated World Bank staff rules because it did not inform her that she was a subject of a probe and as such didn't allow her to respond to its findings.

Mr Breuer also said WilmerHale did not include the full statements Ms Georgieva made in her interview with the investigating law firm and that her comments were “linked together inappropriately to support a false narrative".

Mr Breuer, who previously defended President Bill Clinton during his impeachment proceedings in the 1990s, also cited other elements in the WilmerHale investigation that he said pointed to “serious flaws” in the probe that undermine its credibility and findings.

For instance, Mr Breuer cites that Shanta Devarajan, one of the main authors of the World Bank's Doing Business survey, publicly stated his comments in an interview with WilmerHale were taken out of context. He also said “mistaken inferences” by WilmerHale's report were based on “the conjecture of a limited number of individuals, many of whom do not possess direct knowledge of the events or issues upon which they are opining".

“The email from WilmerHale requesting my participation said clearly that I was not a subject of the investigation and assured me that my testimony was confidential and protected by World Bank Staff Rules, which guarantee due process. None of this proved to be true. I was never afforded an opportunity to review the notes taken during my interview for accuracy and to offer clarifications,” Ms Georgieva said in a statement last week.

“I was not allowed to read and respond to references that directly relate to my actions in the report before it was made final and publicly released. I was also not given an opportunity to present information regarding its conclusions or challenge the fact that some of my statements were ignored or taken out of context,” she added.

Ms Georgieva said the findings of the investigation by WilmerHale do “not accurately characterise” her actions with respect to the World Bank survey nor portray her character or the way she conducted herself through her professional career.

“I have dedicated my life to serving the public good. Whether at the World Bank, the European Union, or the International Monetary Fund, I have always worked hard to protect and promote the institutions that I have had the privilege to serve and help lead. I believe in their goals and I have worked tirelessly to achieve them,” she said.

“Those who have worked with me over my career know me as someone who respects and follows the rules, encourages open dialogue, and seeks to reach the best decisions in the right way — collaboratively and in good faith. I have always asked my colleagues to do the same. I care deeply about due process being followed in all public institutions and in the importance of transparency by those who lead them. That is why I willingly agreed to be interviewed by the lawyers conducting the investigation into the Doing Business reports.”

If Ms Georgieva steps down, it is likely that one of her four deputy managing directors will serve as acting chief until a new person is selected to lead the fund.

As part of an informal understanding between the US and Europe, the leader of the IMF is usually a European, while the World Bank chief is an American.