by Shalini Ramachandran, Jenny Strasburg and Anna Maria Andriotis
April 22, 2025
from WSJ Website

Recovered through Archive Website

Similar Spanish version





Klaus Schwab

Founder quit

after board moved to investigate

whistleblower allegations,

which he denies, including use

of luxury property and travel...

World Economic Forum (WEF) founder Klaus Schwab is under investigation by the organization he created after a new whistleblower letter alleged financial and ethical misconduct by the longtime leader and his wife.

The anonymous letter was sent last week to the Forum's board and raised concerns about the Forum's governance and workplace culture, including allegations that,

the Schwab family mixed their personal affairs with the Forum's resources without proper oversight, according to the letter and people familiar with the matter.

It included allegations that,

Klaus Schwab asked junior employees to withdraw thousands of dollars from ATMs on his behalf and used Forum funds to pay for private, in-room massages at hotels.

It also alleged that his wife Hilde, a former Forum employee, scheduled "token" Forum-funded meetings in order to justify luxury holiday travel at the organization's expense.

Klaus Schwab in recent days argued against an investigation, telling board members that he denied the unsubstantiated allegations and that he would challenge them in a lawsuit, the people said.

The board of trustees decided to open a probe during an emergency meeting on Easter Sunday.

Schwab opted to resign immediately as the chairman, instead of staying on for an extended transition period as previously planned.

The Schwabs said through a spokesman that they deny every allegation in the whistleblower complaint.

To protect their reputation, Klaus Schwab intends to file a lawsuit against whoever is behind the anonymous letter and "anybody who spreads these mistruths," the spokesman said.

Whenever Schwab charged massages at a hotel to the Forum while on travel, he'd always pay the Forum back, the spokesman said.

Schwab and his wife denied the allegations about luxury travel and withdrawing money.

In a statement, the Forum said its board unanimously supported the decision to initiate an independent investigation,

"following a whistleblower letter containing allegations against former Chairman Klaus Schwab. This decision was made after consultation with external legal counsel."

The Forum said it takes,

"these allegations seriously, but they remain unproven, and will await the outcome of the investigation to comment further."

The letter also raises concerns about how Klaus Schwab treated female employees and how his leadership over decades allegedly allowed instances of sexual harassment and other discriminatory behavior to go unchecked in the workplace, allegations that were raised in a Wall Street Journal article and previously investigated by the Forum.

The Forum disputed the Journal's reporting at the time, and Schwab denied the allegations against him.

"We feel compelled to share a comprehensive account of systemic governance failures and abuses of power that have taken place over many years under the unchecked authority of Klaus Schwab," the states the letter, which said it was from current and former Forum employees.

The organizer of the annual Davos conference has been shaking up its leadership in recent weeks in response to a previous board probe into its workplace culture.

In a recent memo, Børge Brende, the Forum's CEO, said the Forum would take steps to address leadership issues identified by the prior probe and that the investigation didn't substantiate the allegations against its founder.

A few weeks ago, Schwab, 87, said he'd step down as nonexecutive chairman of the Forum's board, and the Forum said the succession process would be completed by January 2027.

The whistleblower letter blew up that timeline...

Behind the scenes, a high-stakes boardroom drama unfolded pitting Schwab against the global powerplayers on the Forum's board.

The board includes celebrities like cellist Yo-Yo Ma and politicians like Al Gore.

 

It also has business leaders like AXA Group CEO Thomas Buberl and Accenture CEO Julie Sweet.

Trust between the board and Schwab had been deteriorating over the course of the past year, some of the people said.

After receiving the whistleblower letter, the audit and risk committee of the board decided over the weekend that it would open an independent investigation into the allegations.

One allegation raised in the letter is the Schwab family's use of Villa Mundi, a luxury property purchased before the 'pandemic' by the Forum, next to the organization's headquarters in Geneva.

Villa Mundi is a sprawling Modernist house built in the 1950s overlooking Lake Geneva. It was renovated over several years and opened as a meeting and conference center in 2023.

The whistleblower letter maintains that Hilde Schwab maintains tight control over use of the building and that portions of the property are understood to be reserved for private family access; the Schwabs deny the claim.

The letter says the Forum paid about $30 million to purchase the property and another roughly $20 million to renovate it.

Hilde Schwab helped oversee renovations to the property, which had fallen into disrepair. The refurbishment incorporated materials such as recycled glass and fishing nets, according to local news reports.

The Schwab spokesman said the renovations to the house, which were costly because of the need to preserve historic features, have boosted the value of the property.

The spokesman added that the Schwabs live near Villa Mundi and have used it only for Forum-related events.

In a statement, Hilde Schwab said,

"The building is a role model for sustainable architecture, which is dear to my heart, and I was glad to show it to people who expressed interest."

Over the weekend, Schwab told board members that the whistleblower allegations were unfair and inaccurate, and he sought a chance to address the board during its Sunday meeting.

The board decided against that, leaving Schwab feeling that he didn't have his say.

"He never had a chance to give his side of the story to the board or the audit committee," the Schwab spokesman said.

Schwab forfeited his pension of 5 million Swiss francs as a sign of good faith to the Forum, he said.

The Forum announced his resignation on Monday.

"Following my recent announcement, and as I enter my 88th year, I have decided to step down from the position of Chair and as a member of the Board of Trustees, with immediate effect," he said in the statement.

The board appointed Peter Brabeck-Letmathe, the former Nestlé CEO, as the interim chairman and established a search committee for the future chair's selection.

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