When Klaus Schwab told the World Economic Forum’s Council last month he planned to “start the process of resigning” from an organization he founded 55 years ago, he pioneered a list of achievements.
WEF’s annual winter meeting of political and business leaders at the Swiss ski resort in Davos will become a “global village” that can address common challenges and “essential to avoid war,” he wrote in an email on April 1.
Schwab’s own “intellectual, political, economic and social contribution to the world” was recognized in “international and national distinctions,” but the “small nonprofit foundation” he created was an international organization given special status by Switzerland for its domestic role.
“That’s obvious,” the 87-year-old said, “I don’t need to create a legacy that says I don’t need to work hard any more.”
Just a few weeks later, Schwab is working furiously to protect his legacy after a barrage of charges urged the WEF board to order a second investigation into his actions less than a year later.
Instead of a gradual handover that continues until January 2027, Schwab was kicked out as chairman at the end of April, with investigators picking up financial ties with WEF after whistleblowers alleged he and his family had received inappropriate financial benefits. Homberger, a Swiss law firm, will lead an internal investigation.
“This process is carried out in a thorough, enthusiastic and timely manner,” WEF said. “The Forum will not make further comments on the issue before the investigation is over.”
However, Schwab, who strongly dismisses all claims against him, fights back by claiming that the WEF has for decades promoted him at low wages, benefited from the unpaid work by his wife, and enjoyed the reflected glory of their personal charitable contributions.
Some current and former WEF employees view the unfolding events as an inevitable denial for organizations and their leaders whose identities are very closely intertwined.
“Essentially, like many founders, he thought the agency could not completely separate from him,” a former member of the WEF Management Committee said. “He should have left years ago, but he clearly couldn’t. I’m sure he’ll fight teeth and claws.”
The current senior staff member said Schwab “can’t let go – if these scandals didn’t happen, he would still be here.”
The anonymous whistleblower allegations came in on the allegations that Schwab was primarily sided with a toxic workplace culture in which women and black employees suffered from discrimination, and that his own remarks made some women uncomfortable.
Karin Keller Sutter, president of the Swiss Union on the left, shook hands with Hilde Schwab and European Commission President Ursula von der Leyen and Klaus Schwab ©Laurent Gillieron/AFP/Getty Images
The latest allegations revolved around money came as a specific humiliation against Schwab. Some claims near the unsigned email committee accused him and his family of mixing personal and labor costs. One accused ghostwriters of reaping personal royalties from WEF-funded books, which are sold using forum resources, based on research by staff.
Those familiar with the arrangement said WEF paid for the ghostwriter, but added that Schwab was completely involved in developing the book’s discussion.
“A universally accepted practice in universities, think tanks, media and other organizations is that the authors retain all rights and fees,” Schwab said in a statement distributed last month. “These publications have contributed significantly to the intellectual leadership of the World Economic Forum.”
Schwab also denied allegations that his wife had carved out some of the WEF property that had been renovated for private use by the family, and requested a holiday forum under the pretext of work. Whenever the resource was used for personal purposes, he said the money was refunded.
“I created the World Economic Forum. … After organising my first meeting in Davos on risk for entrepreneurs, Schwab wrote in his statement rebutting the whistleblower claims. “Under my leadership, the forum has been successful for ages 55 and over, creating value for use in the public interest.”
His wife and former assistant, Hilde, married Schwab in 1971, stopped becoming a WEF employee, but continued to play a role “without remuneration” in the development of cultural life and the organization’s wealth. The couple is personally blessed with the arts that their affiliation with entrepreneurs, young mentors and WEF contributed to their connections, he said.
Schwab added that he never got the SFR5MN bonus he negotiated with the board in 1999. In total, he estimated that SFR8MN had missed what he owed him.
“That’s not money for Klaus,” the former senior employee said. “It was about fame of importance, as you can see in Davos. It was about being in the heart of position and everything.”
Another new allegations reported last month by the Financial Times was that Schwab manipulated WEF’s flagship “Global Competitiveness Report” with curry favors with the government. Schwab acknowledged that when government representatives contact him and challenge his country’s rankings, they could discuss the debate and conflict about the data they communicate to researchers, but he said he would call the manipulation “inhumous.”
Schwab, who refused to respond to requests for additional comment, gave up his executive role just before the Wall Street Journal published his claims on workplace culture in June last year. He continued as non-executive chair of the board while law firm Covington and former U.S. Attorney General Eric Holder investigated on behalf of a committee of independent councillors.
The Swiss ski resort in Davos will host the WEF’s annual winter meeting of political and business leaders ©SOPA Images/Lightrocket
They ultimately did not demonstrate the allegations against Schwab, WEF said, but the process strained his relationship with the other boards and created a surprise among the business executives funding the annual meeting in Davos, according to those familiar with the situation.
He also highlighted Schwab’s son Olivier. He was WEF’s head of technology and was accused of failing to properly respond to employee complaints about sexual harassment by senior staff members, raising questions about the quality of the organization’s governance more commonly. According to a spokesman, Olivier Schwab left WEF in April. Klaus Schwab’s children, Nicole, left the organization last year.
Members of the Board’s Audit and Risk Committee found that the latest claims could not be ignored when it landed on April 16th.
The committee consists of business world grandis, including David Reubenstein, co-founder of private equity group Carlisle, and AXA CEO Thomas Boubell. Wideer Council – Who is the global elite, including the head of the World Bank and head of the European Central Bank, former US vice president, and among the 29 members, has approved the Audit Committee’s decision to commence a second investigation at a rushed meeting on April 20th.
WEF is now facing a question that goes beyond immediate investigation: how quickly they distance themselves at the speed and speed of creating it and distancing them from the men they have dominated for years.
The governance structure, established in 2015, when Switzerland recognized the special status of WEF as an “International Cooperation Agency for International Cooperation,” and granted tax and other privileges, envisages splitting the roles of Schwab’s retirement board and management roles, but states that there must be at least one member of the Schwab family.
More broadly, the question is whether Schwab-free WEF can bring world leaders and business titans to Davos every year.
Borge Blend, former Norway Foreign Minister, is president of WEF ©Fabrice Coffrini/AFP/Getty Images
With former Norway foreign minister Borge Brende and Swiss businessman Peter Brebeck Letomate, who served as chairman of Nestlé and Formula 1, intervening to become interim chairman of the trustee, WEF works to present an air of orderly transition. Meanwhile, corporate partners, along with ECB President Christine Lagarde, are quietly exchanging names among those who Rubenstein was mentioned, among those who could emerge as the next chair.
“All of this place is panicking about how much they are hurt by him,” said senior staff member, who has noted that since the emergence of poor governance allegations, he has focused on “tremor” among corporate partners. “That’s the biggest worry at the moment. Is it dying with him or is it stuck with WEF?”
WEF said recent developments have not changed their “still commitment to its mission and values” and are dedicated to continuing to be a “reliable platform” for dialogue and collaboration.
For Schwab, there remains a fight to remove the asterisk in his legacy. There are allegations that readers of his April 1 email “confirmed that despite the fact that they were filled with a world that sometimes creates challenging situations, they were grateful to those who shared our constructive spirit of optimism.
He concluded that his message was time to write his memoirs and WEF history. But now there seems to be one chapter that needs to unfold.
This article has been revised to reveal that Børge Brende, as originally stated, is not Finland, but a former Norway Ministry of Foreign Affairs.
