Yellen Says IMF, World Bank Risk Loss of Confidence From Scandal

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Treasury Secretary Janet Yellen warned that a scandal over the credibility of rankings of countries’ business climates could hurt confidence in the International Monetary Fund and World Bank unless the institutions take strong actions to prevent misconduct and support whistle-blowers.

Yellen told global finance ministers at the IMF and World Bank annual meetings that the U.S. “will monitor developments closely and evaluate any new facts and findings should they become available” after deciding earlier this week that the controversy didn’t warrant the removal of IMF Managing Director Kristalina Georgieva, who was accused of improper pressure on World Bank staff members by a law firm probing the matter.

The findings from probes into the World Bank issue “could reduce confidence in the international financial institutions if there is not strong action to boost accountability, protect data integrity and prevent misconduct,” Yellen said Thursday, according to remarks released by the Treasury Department. “It is also important that international financial institutions consider ways to enhance internal systems for whistle-blowing and whistle-blower protections.”

The episode, which took place in 2017 while Georgieva was chief executive officer of the World Bank, nearly cost the Bulgarian national her current job as head of the IMF. The fund’s board reviewed the accusations, but ultimately ruled Monday that she had not played an improper role in the episode.

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

‘Legitimate’ Concerns

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

Asked at a Thursday press conference with Swedish Finance Minister Magdalena Andersson to address Yellen’s remarks, Georgieva referred the question to Andersson, the head of the IMF’s main steering committee. Andersson cited the IMF board’s opinion that Georgieva has the unanimous, full support of the board. 

Yellen’s statement Thursday otherwise lauded progress made during global meetings in Washington this week. It came at the annual IMF and World Bank session, where global finance chiefs addressed topics ranging from climate change and the ongoing pandemic to global inflation and developing country debt.

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