The Asian Infrastructure Investment Bank said it welcomed a investigation by the Canadian government into allegations that the institution faces interference from the Chinese Communist Party.
(Bloomberg) — The Asian Infrastructure Investment Bank said it welcomed a investigation by the Canadian government into allegations that the institution faces interference from the Chinese Communist Party.
The review is a “relatively modest and appropriate step,” AIIB Vice President and Corporate Secretary Ludger Schuknecht said Thursday in an interview. “We welcome this review by Canada, because it will mean transparency, and we have nothing to hide.”
On Wednesday, Prime Minister Justin Trudeau’s government froze Canada’s activity with the bank, which is headquartered in Bejing, while it carries out a review of the alleged party influence that drove a Canadian executive to resign and flee the country.
The bank’s former director of communications, Bob Pickard, announced on Twitter earlier Wednesday that he had left his position because the bank was “dominated by Communist Party members.” He added that he had left the country over fears for his safety if he remained in China.
The AIIB immediately pushed back on Pickard’s accusations, calling them “baseless and disappointing” in a written statement.
Pickard’s resignation and Canada’s response shines a light into a quiet corner of the broader rivalry between the US and China for influence in developing nations, particularly around aid financing and debt issues.
Lenders such as the International Monetary Fund and World Bank have been dominated by the US and its allies since their creation after World War II. In recent years, however, China has emerged as the biggest sovereign creditor to emerging markets, with the AIIB as its multilateral development lending answer to the US-based institutions.
US Treasury Secretary Janet Yellen was explicit earlier this week on the role Washington sees for Western-aligned lenders. “Our leadership at these institutions is one of our core ways of engaging with emerging markets and developing countries,” she said in a congressional hearing. Their aid “serves as an important counterweight to nontransparent, unsustainable lending from others, like China.”
The AIIB was established in 2016 with the goal of “investing in sustainable infrastructure in Asia and beyond,” according to its website. It says it has so far invested in 221 projects worth $42 billion. China is the largest shareholder with 26.6% of the voting share, followed by India at 7.6%.
“We are fully cooperating on this review and happy to share the things that Canada would like to know from us,” Schuknecht told Bloomberg News, saying the bank was in contact with the Canadian side on a regular basis.
Schuknecht said he was not aware of any current or former employees raising similar concerns over the operations of the bank. He added that he only found out about Pickard’s allegations when they were posted on Twitter.
Canada applied to join the AIIB in 2016 and formally entered the institution in 2018. As of 2019, it was dedicated to a 1% membership in the bank that would commit it to a stake worth $995 million.
In announcing Canada’s suspension of operations, Finance Minister Chrystia Freeland cast the decision as part of the broader Western push to counter China’s influence.
“As the world’s democracies work to de-risk our economies, by limiting our strategic vulnerabilities to authoritarian regimes, we must likewise be clear about the means through which these regimes exercise their influence around the world,” she told reporters in Ottawa.
For his part, Pickard dismissed the AIIB’s pledge to cooperate. “Transparency and openness are not exactly the bank’s forte,” he said Thursday in an interview. “I will be extremely surprised if Canada remains a member of AIIB.”
–With assistance from Eric Martin and Jenni Marsh.
(Updates with background on China’s voting share in the bank.)
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