Canada freezes activity at ‘China’s World Bank’ after infiltration claims

Canada has frozen all activity at the multilateral lender known as “China’s World Bank” after a top official resigned alleging the institution was run by Communist party members who “operate like an internal secret police”.

Bob Pickard, the Canadian director-general for communications of the Beijing-headquartered Asian Infrastructure Investment Bank, said he flew to Tokyo on Wednesday because he feared for his safety after raising concerns about what he claimed was the party’s infiltration of the lender.

The controversy, which underlines the tensions in multilateral institutions trying to bridge the growing divide between China and the west, triggered an immediate response from Ottawa.

“The government of Canada will immediately halt all government-led activity at the bank,” said Chrystia Freeland, Canada’s finance minister and deputy prime minister. Freeland added she was launching a review of the allegations and Canada’s “involvement” with the AIIB.

The furore erupted after Pickard wrote on Twitter that “as a patriotic Canadian”, his only course was to resign and leave Beijing.

“These people are like an invisible government inside the bank and this is what I can’t be part of,” Pickard told the Financial Times from Tokyo. “I don’t want to be a useful idiot.”

The AIIB said in a statement that Pickard’s “recent public comments and characterisation of the Bank are baseless and disappointing”.

“We are proud of our multilateral mission and have a diverse international team representing 65 different nationalities and members at AIIB, serving our 106 members worldwide, many of whom have been with us since our formation in 2016,” the AIIB said.

The accusations are a challenge to efforts by the AIIB and its president, former Chinese vice-finance minister Jin Liqun, to present the bank, which was founded in 2016, as an independently managed alternative to the Bretton Woods multilateral institutions such as the World Bank and IMF.

Although China is the largest shareholder with 26.6 per cent voting rights, the bank’s 106 members include numerous western countries such as Canada, France, Italy and the UK. Danny Alexander, the chief secretary to the UK Treasury from 2010 to 2015, serves as the AIIB’s vice-president of policy and strategy.

The bank froze its dealings with Russia at the outbreak of the war in Ukraine and has a triple-A credit rating, which allows it to raise capital at very low costs.

In an internal memo seen by the FT, Jin told staff that management was aware of Pickard’s allegations and was “addressing the situation”.

“We acknowledge the uncertainty these comments can cause for all of us that work at the AIIB. We hope that you will join us in wishing Bob well for the future,” Jin said.

An AIIB insider said the allegations did not correspond with what he had seen working at the bank for a number of years and that they were an “unfortunate characterisation” reflecting one person’s personal view.

Three other people familiar with the matter questioned Pickard’s accusations, saying they had not seen evidence to support his claims that the party was running the bank.

Pickard said he had made his concerns clear about party influence in writing on two occasions over the past month. He said he had noticed that all the bank’s departments from the president’s office down included members of China’s Communist party, who quietly ran things in a way that undermined its claims of transparency.

“Internally, I have raised my concerns about CCP influence. When you work there for a while you realise this is really the hidden hand internally of the bank,” he said.

China’s embassy in Canada on Wednesday dismissed Pickard’s criticism as “purely sensational hype and outright lies”, adding in a warning to Ottawa that the “real risks” to global development are “bloc confrontation and a ‘new cold war’”.

International commercial institutions have come under fire for allowing the Chinese Communist party to operate within them. The FT revealed last year that HSBC had become the first foreign lender to install a Chinese Communist party committee in its mainland subsidiary.

According to Chinese law, companies with three or more CCP members must have an organisation “to carry out activities of the party”. 

Pickard said he had resigned in writing two days ago but decided it was unsafe to remain in China, which has imprisoned Canadian citizens on charges described by Ottawa as “arbitrary”.

Additional reporting by Maiqi Ding in Beijing