© The Indian Express Pvt Ltd
Tags:
Journalism of Courage
The World Economic Forum is investigating allegations against its founder and former Chairman, Klaus Schwab, following a whistleblower letter accusing him and his wife of financial and ethical misconduct.
The Wall Street Journal on Tuesday (April 22) reported that the forum received the letter last week, raising “concerns about the Forum’s governance and workplace culture”.
In a statement emailed to agencies, the WEF said it “takes these allegations seriously, it emphasizes that they remain unproven, and will await the outcome of the investigation to comment further,” without providing further details.
This follows a nearly year-long investigation into the forum and its management following a similar letter last year, alleging a toxic workplace culture that fostered discrimination against women and black people.
Schwab and his wife Hilde, named in the latest allegations, have denied all the claims against them and claim they are being subjected to a targeted character assassination attempt. Here is what to know.
Klaus Schwab is a German engineer and economist best known for founding the European Management Forum in 1971, which was subsequently renamed the World Economic Forum (WEF).
Schwab was a professor of business policy at the University of Geneva between 1972 and 2003. As an author, he has championed the concept of stakeholder capitalism, which he defines as “a form of capitalism in which companies do not only optimize short-term profits for shareholders, but seek long term value creation, by taking into account the needs of all their stakeholders, and society at large.”
Today, the WEF is best known as the organiser of the annual gathering of international politicians and economic leaders at Davos, Switzerland. While the summit has been credited with enabling diplomatic breakthroughs between warring nations, it has been decried in recent years as an elitist gathering.
Following the allegations raised in the 2024 WSJ report, Schwab stepped down from his position as the forum’s executive chairman last May and was slated to stay on as its non-executive chairman till 2027. He stepped down from this post last week and as a member of the Board of Trustees on Monday, following an emergency board meeting on Easter Sunday.
What were the allegations raised in 2024?
A 2024 WSJ investigation alleged that Schwab oversaw a toxic workplace environment, which enabled women to be routinely sexualised and objectified, received comments on their appearance or were otherwise made to feel unsafe. Schwab himself allegedly made suggestive comments and lewd gestures. The report cited senior staffers who alleged that Schwab preferred to hire attractive people
The report alleged that he identified a group of employees aged over 50 for dismissal to “lower the average age of the workforce”. He fired the HR chief, Paul Gallo, a former World Bank staffer, for refusing to comply without a valid reason, according to the report.
The report also said that managers who had received complaints of sexual harassment were retained in the organisation, while the women employees who came forward were either eventually dismissed on the grounds of “job performance” or otherwise sidelined.
The WSJ report also alleged that “white on blue action” – meaning advances by White badge-holders, or VIP attendees at Davos, upon blue badge-holders or WEF staffers – was common. According to the report, many of these employees were discouraged from seeking recourse. One woman cited in the report said the women at these events “never really felt protected.”
The 2024 WSJ report pointed to how the organisational structure of the WEF then effectively let it function as a “family affair”. One bylaw empowered the founder to designate his successor on the board of trustees, which governs the council.
The 2024 WSJ report also noted that employees returning from maternity leave were subjected to discriminatory treatment and saw their roles at the forum being reduced or otherwise terminated.
According to the report, black employees at the forum similarly had to contend with outright discrimination. Six employees reportedly lost out on promotions or other job advancements, while others mentioned in the report alleged the use of racist words in conversation around them. Among the latter, those who complained saw no meaningful progress on their protests, according to the report.
And what allegations were raised now?
The WEF reportedly received an anonymous whistleblower letter last week that alleged that Schwab had “undermined the integrity of the WEF by manipulating its ‘global competitiveness report’,” The Financial Times reported on Wednesday (April 23). The report, published annually between 1979 and 2020, ranks countries on criteria such as education, health systems and infrastructure, and a basis for discussions at Davos.
The WSJ on Tuesday reported that the letter included allegations of using forum funds to pay for private massages at hotels, with Schwab asking junior employees “to withdraw thousands of dollars from ATMs on his behalf.” This report also alleged that Hilde Schwab, his wife and former WEF employee, scheduled frivolous “token” meetings funded by the Forum to undertake luxury holiday travel.
