Scandal could affect confidence in IMF, World Bank: Yellen

The Secretary of the Treasury of USA, Janet Yellen, warned that a scandal surrounding the credibility of a ranking of countries on their business climate could damage confidence in the International Monetary Fund and the world Bank unless institutions take strong measures to prevent malpractices and support whistleblowers.

Yellen also said the US will “closely monitor developments and assess new facts and findings if they become available” after deciding earlier this week that the controversy did not justify the removal of IMF Managing Director Kristalina Georgieva. , who was charged by a law firm investigating the issue of unduly pressuring members of the World Bank staff.

The World Bank’s research findings “could reduce trust in international financial institutions if strong steps are not taken to promote transparency, protect data integrity and prevent malpractices,” Yellen said Thursday, according to statements released by the Treasury Department. “It is also important that international financial institutions evaluate ways to improve internal systems for the protection of whistleblowers and complaints.”

The episode, which took place in 2017 while Georgieva was CEO of the World Bank, nearly cost the Bulgarian economist her current position as IMF leader. The Fund’s executive board reviewed the allegations, but ultimately ruled Monday that she had not played an inappropriate role in the episode.

Georgieva has vigorously denied any malpractice in the World Bank report, and the IMF board on Monday reaffirmed its “full confidence” in Georgieva.

‘Legitimate’ concerns

Yellen’s comments Thursday came three days after saying that the law firm’s investigation “raised legitimate issues and concerns.”

On Thursday Georgieva attended a press conference with Swedish Finance Minister Magdalena Andersson and, when asked about Yellen’s remarks, the IMF leader referred the question to Andersson, who heads the IMF’s main steering committee. Andersson cited the IMF board’s view that Georgieva has the unanimous and full support of the board.

Thursday’s statement, in which Yellen praised the progress made this week during global meetings in Washington, came at the annual session of the IMF and the World Bank, where finance headlines from around the world addressed issues ranging from change climate and the current pandemic to world inflation and the debt of developing countries.