Klaus Schwab, the 87-year-old founder of the World Economic Forum (WEF), has stepped down immediately as chair of the organisation he led for over five decades, following a whistleblower letter that triggered a formal investigation into alleged financial and ethical misconduct by him and his wife, Hilde Schwab, the Wall Street Journal reported.
The anonymous letter, reportedly authored by current and former WEF employees, detailed alleged governance failures, misuse of Forum funds, and inappropriate workplace behaviour under Schwab’s leadership. It was sent to the Forum’s board last week and led to an emergency meeting on Easter Sunday, where trustees voted to launch an independent investigation.
Allegations include misuse of funds and preferential treatment
The whistleblower letter accuses Schwab of instructing junior employees to withdraw thousands of dollars in cash from ATMs and charging private hotel massages to the Forum’s account—charges he allegedly reimbursed. Hilde Schwab, a former Forum employee, is accused of organizing Forum-funded “token” meetings to justify luxury travel. Both deny the allegations.
The letter also questions the use of Villa Mundi, a $50 million lakeside property owned by the Forum near its Geneva headquarters. While officially a conference centre, the letter claims parts of the property were reserved for Schwab family use, a charge the Schwabs also dispute.
Hilde Schwab oversaw renovations of the house and said she was proud of its sustainable design, which incorporated recycled materials. A spokesperson for the Schwabs stated the family only used Villa Mundi for official Forum events and denied any misuse of resources.
Internal tensions and long-simmering board concerns
Tensions between Schwab and the Forum’s board had reportedly been building over the past year. The recent whistleblower letter accelerated an already planned leadership transition originally set to conclude by January 2027. Schwab’s immediate resignation disrupted that timeline, following the board’s decision to investigate.
Schwab, who had announced his intent to transition to a nonexecutive role, forfeited his 5 million Swiss franc pension as a sign of goodwill. He was not permitted to address the board during its emergency meeting, a decision his spokesman criticized as unfair.
In his resignation statement, Schwab said: “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.”
Investigation will probe decades of alleged governance issues
The WEF board, which includes prominent figures such as Al Gore, Yo-Yo Ma, and CEOs from AXA and Accenture, unanimously approved the decision to launch an independent probe, advised by outside legal counsel. The organisation said it is taking the allegations seriously but emphasised that they remain unproven and will not be commented on further until the investigation concludes.
The whistleblower letter also revisited longstanding concerns about Schwab’s treatment of female employees and workplace culture, previously raised in a Wall Street Journal report. At the time, the Forum denied the allegations and said they were not substantiated in an earlier internal probe.
Interim leadership and next steps
Peter Brabeck-Letmathe, former CEO of Nestlé, has been appointed as interim chairman of the Forum’s board, and a formal search process is now underway to find Schwab’s long-term successor.
As the Forum prepares for its post-Schwab era, it now faces a critical test of its commitment to transparency and good governance. The outcome of the investigation will likely determine how much of the organisation’s credibility remains intact as it looks to reshape its future without its iconic founder.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
