External consultants find deeper problems in the World Bank’s “Doing Business” report

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Weeks before the World Bank scrapped its flagship Doing Business ranking after a scathing independent investigation, a group of outside advisors recommended revising the ranking to limit countries’ efforts to “manipulate its results”.

An 84-page report, written by senior academics and economists, was posted on the bank’s website on Monday, about three weeks after it was presented to the World Bank’s chief economist, Carmen Reinhart.

The World Bank said Thursday it would cancel the “Doing Business” series on the business climate in the countries, citing internal audits and a separate independent investigation by the law firm WilmerHale, involving senior World Bank leaders including Kristalina Georgieva, who is now the International Monetary Fund head, were found, put pressure on staff during her time as World Bank chief to change the data in favor of China.

Georgieva has emphatically denied the results.

World Bank President David Malpass, in his first public comments since the data tampering controversy broke out to CNBC last Thursday, said the WilmerHale report “speaks for itself” and that the bank will explore new approaches to countries to help improve their business climate.

The review, released on Monday, was authored by a group assembled by the World Bank in December 2020 after a series of internal reviews uncovered data irregularities in reports across China, Saudi Arabia, the United Arab Emirates and Azerbaijan.

It calls for a range of remedial measures and reforms to address the “methodological integrity” of the Doing Business report and cites a “pattern of government efforts to disrupt the evaluation of the reports in recent years”.

“The World Bank needs introspection. She has advocated country reforms for better governance, transparency and practice. Now she has to apply the recipe for her own reform, ”said Mauricio Cardenas, professor at Columbia University and former Colombian finance minister who headed the panel of experts.

The experts criticized the Doing Business series for a lack of transparency about the underlying data and questionnaires used to calculate the rankings, called for a firewall between the Doing Business team and other World Bank operations, and the establishment of a permanent external review committee .

“We have been informed of several cases in which national governments have tried to manipulate the DB results by putting pressure on individual contributors,” the report said, referring to lawyers, accountants or other professionals.

“World Bank officials mentioned several countries where they believe government officials have instructed contributors how to respond. And, of course, even if there is no explicit government pressure, the perceived threat of retaliation can affect contributors’ reports.”

Sales advice

The authors also urged the bank to stop selling advisory services to governments aimed at improving a country’s score as this was an obvious conflict of interest.

“The World Bank shouldn’t be concerned with assessing countries’ business environments while accepting payments to coach countries in improving their results,” the authors write. The World Bank offered these Reimbursible Advisory Services, or RAS, in a number of countries, including some that have been involved in investigating data manipulation, such as China and Saudi Arabia, the review said.

In December 2020, the review found, an internal audit reported that bank management pressured nine out of 15 employees to manipulate data in the 2018 and 2020 editions of the Doing Business Index, making Saudi Arabia the “most reformed nation in the world.” “Place went and the rankings of the United Arab Emirates and China, while Azerbaijan was pushed out of the top 10 rankings, reported the external consultants.

The separate WilmerHale report states that changes to Saudi Arabia’s data “are likely the result of an effort by a senior bank employee to achieve a desired outcome and reward Saudi Arabia for the important role it has played in the banking community has, including its significant and ongoing RAS ”. Projects. “

Justin Sandefur, a senior fellow at the Center for Global Development in Washington and another member of the panel of experts that produced Monday’s report, said it showed “a governance problem” at the World Bank and that he had seen no assurances that similar problems were in place would not continue with other records.

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