The World Bank has hired outside investigators to check how a US$1 billion low-interest loan from China ended up in the financial institution's fund for poor countries.

World Bank president Jim Yong Kim tapped a law firm to look into a transaction made in December last year after the bank treasurer found it unusual how a loan from China made it to the International Development Association that provides loans to poorest nations in the world.

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Last year, the Bank of China extended a US$1 billion loan at current market interests to the IDA. Beijing's State Administration of Foreign Exchange handed out a US$300 million grant, US$179 million of which was brought down to a low-interest level.

The association spent the funds for buying a US$1.179 billion bond from the World Bank's International Finance Corporation.

The IFC is another World Bank agency headed by jin-Young Cai, a Chinese citizen who once headed Goldman Sachs in China. In the past, the IFC has also handed out aid to the IDA.

The bank's treasury department, stressing that it had no doubts or worries with China or its good intentions, asked the bank's board of auditors to look into the deal. 

Member nations typically make direct donations to the IDA, but new rules in 2013 let them provide low-interest borrowings for the first time.

China was one of the first five countries to take part in the program, along with Japan, Saudi Arabia, France and the UK.  Unlike the four other donors, China does not have an arm to make direct concessional loans to the IDA.

A spokesperson said the World Bank is committed to financial integrity so it is working diligently to protect the resources entrusted by shareholders.  The bank said the results of the probe would be shared with our external auditors and the bank's management, which will take the appropriate measures identified in the review.