The World Bank has launched an investigation into a US$1 billion loan extended by China for the bank’s poverty fund amid allegations that the transaction may have violated bank rules.
The bank’s president, Jim Yong Kim, hired a top law firm on behalf of the institution in late December to conduct the review, the Wall Street Journal reported, citing unnamed sources.
At issue is whether management created a conflict of interest when one of the bank’s units helped China lend cash to another of the bank’s arms, according to the newspaper.
In a memo to the executive board’s audit committee, bank treasurer Madelyn Antoncic and other officials from her department said chief financial officer Bertrand Badré and other senior bank officials may have broken the institution’s rules when securing the loan, the sources said.
The World Bank hired the law firm “to ensure a careful and impartial fact finding”, a bank spokesman was quoted as saying.
“Management will take any necessary action identified in the review,” he added.
China lent the World Bank the money last year as part of an international fundraising effort for the institution’s key poverty fund, the report said.
The external probe comes amid a restructuring of the bank led by Kim and Badré, which drew much criticism as it involves cutting staff and overhauling the bank’s financing strategy.
Last year, Badré came under fire after he was granted a US$100,000 bonus while seeking US$400 million in savings and staff cuts. Badré declined to accept the last tranche of the bonus.
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