Klaus Schwab in Talks With WEF to Resolve Their Dispute

(Bloomberg) — World Economic Forum founder Klaus Schwab and the organization he led for more than half a century are in talks to end their months-long dispute.

Schwab left the WEF suddenly in April after accusations of financial misconduct emerged and the board called for an investigation, sparking an internal clash. In a joint statement released to Bloomberg News on Tuesday, they said they expect the external probe to be concluded by the end of August. 

Such a timeframe would be far faster than a previous investigation into allegations of harassment at the WEF, which began last summer and took about eight months. It would also allow the Forum to focus on preparations for its annual meeting in Davos in January without the scandal hanging over it. 

In the meantime, the two sides are in talks to “normalize their relationship in order to safeguard the forum and the legacy of the founder,” according to the emailed statement. 

Schwab has denied all claims of misuse of funds and also filed a criminal complaint over the allegations that led to his exit from the Forum. There was no mention of that in the statement.

A fast-track investigation and some reconciliation might also help the board get moving on a new plan to find a successor for the 87-year-old. His early departure — Schwab wanted to stay until early 2027 — scuppered a long-held idea to get European Central Bank President Christine Lagarde for the role of chair, Bloomberg has reported. Lagarde said this month that she was determined to see out her term, which runs until late 2027.

Schwab ran the Geneva-based organization for 50 years and turned its annual Davos meeting into a must-attend event for bankers, business figures and politicians. His exit has sparked intense speculation about who takes over and what it all means for the gathering, which involves days of networking over cocktails and canapes by the world’s business and policymaking elite with a sprinkling of celebrity. 

Davos Brand

“The brand is big enough to recover to some extent,” said Howard Davies, former chairman of NatWest Group Plc and the UK’s Financial Services Authority who’s been to Davos more than 20 times. “It will be a setback but most of the people who go there to meet clients and customers won’t really care about it.”

The challenge, in his view, will be to get not just a rockstar from the business or political world but someone also willing to roll up their sleeves to network.

“They will need to replicate him,” Davies said. “Just a figurehead won’t quite do it because he has been super active in getting the top people in,” he says.

The WEF board of directors is currently led by former Nestle SA Chairman Peter Brabeck-Letmathe on an interim basis, and includes global heavyweights such as Blackrock Inc.’s Larry Fink and IMF head Kristalina Georgieva. BlackRock’s Philipp Hildebrand also recently joined, maintaining some Swiss influence at the body. 

Schwab’s departure has also prompted a bout of handwringing in Davos. The town was better known for skiing and the sanatorium made famous in Thomas Mann’s novel The Magic Mountain until he brought his conference there in 1971. In 2024, the WEF’s annual revenue amounted to 440 million francs ($543 million), much of that coming from payments and fees from member companies, which then spent generously to host soirees in the Alpine town. 

“Of course people in Davos are worried about the future of the WEF now that Schwab is gone,” said Markus Dambach, CEO of Davosworks, a local Forum-focused advertising firm. 

Ernst Wyrsch, who once managed Davos’s iconic Grandhotel Belvedere that’s played host to Bill Clinton and Angela Merkel, said “it was for sure a shock for Davos to find out that Klaus Schwab was let go.” 

“If the WEF was to leave, that would inevitably press the loser stamp on Davos,” he said in an interview.

Even Schwab himself, who was otherwise full of praise for the advantages the isolated alpine town offered, threatened to relocate the annual meeting because of what he considered to be price-gouging by local businesses. 

But Davos’s deputy mayor, Valerie Favre Accola, said she’s received multiple reassurances from the WEF’s board of trustees that the Forum is here to stay. Such assurances were also received by cantonal politicians. 

–With assistance from William Shaw and Bastian Benrath-Wright.

(Updates with additional comments on Davos)

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