IMF board to debate Georgieva's future, with some backing from Europe -sources - Reuters

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World Bank Chief Executive Officer Kristalina Georgieva speaks at the annual session of China Development Forum (CDF) 2018 at the Diaoyutai State Guesthouse in Beijing, China March 25, 2018. REUTERS/Jason Lee/File Photo

WASHINGTON, Oct 8 (Reuters) - The International Monetary Fund's executive board was due to debate Kristalina Georgieva's future as head of the institution on Friday over her alleged role in a World Bank data-rigging scandal, with some European governments expected to back her, people familiar with the matter said.

A World Bank outside investigation report alleged that when Georgieva was World Bank chief executive in 2017, she applied "undue pressure" on bank staff to make data changes to the flagship "Doing Business" report to boost China's business climate ranking.

The IMF board is reviewing the claims and this week conducted hours-long interviews of both Georgieva and lawyers from WilmerHale, the firm hired by the World Bank's board to investigate data irregularities associated with the Doing Business report read more .

Georgieva has strongly denied the allegations and her lawyer claims that the WilmerHale probe violated World Bank staff rules and denied her an opportunity to respond to the accusations, an assertion that WilmerHale disputes. The IMF board is expected to resume deliberations on the matter on Friday afternoon.

STATING SUPPORT

Thus far, the IMF's largest shareholder governments have not publicly stated their positions on whether Georgieva should continue as IMF managing director, a job she has held for two years.

France plans to voice its support to Georgieva at the board meeting, a French finance ministry source told Reuters on Friday.

Another European finance ministry source said that Georgieva had support from a number of European governments, as no senior officials had publicly stated otherwise.

Georgieva also has received a statement of support from African finance ministers.

The IMF chief has traditionally been chosen by European governments, with the U.S. administration nominating the World Bank's president.

France in 2019 had backed Georgieva, a Bulgarian economist who has served in senior European Commission posts, as a compromise candidate to break a deadlock over the successor to Christine Lagarde, now European Central Bank president.

The U.S. Treasury, which holds an effective veto over major Fund decisions with a 16.5% voting share, has refrained from public judgment on the matter.

The U.S. Treasury has "pushed for a thorough and fair accounting of all the facts" in the ongoing review, said Treasury spokeswoman Alexandra LaManna. "Our primary responsibility is to uphold the integrity of international financial institutions."

ANNUAL MEETING CLOUDS

The IMF board deliberations come as the Fund prepares for its biggest policy event next week, the IMF and World Bank annual meetings in Washington. Whether the board voices support for Georgieva, asks her to leave, or continues to deliberate, the issue expected to dominate the meetings.

Current and former staff from both institutions and outside say that no matter who is to blame for the altered data, the scandal has dented their research reputations raising critical questions over whether that work is subject to shareholder influence.

Anne Krueger, a former World Bank chief economist and IMF first deputy managing director, added her voice to the fray on Thursday, arguing in a blog post that Georgieva needs to step down to restore the Fund's credibility.

"Should Georgieva remain in her position, she and her staff will surely be pressured to alter other countries' data and rankings," Krueger wrote. "And even if they resist, the reports they produce will be suspect. The entire institution's work will be devalued."

Reporting by David Lawder and Andrea Shalal in Washington; Additional reporting by Leigh Thomas in Paris and Bart Meijer in Amsterdam Editing by Marguerita Choy

Our Standards: The Thomson Reuters Trust Principles.

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