China’s AIIB And The Canadian Communications Director
By Chris Devonshire-Ellis June 15, 2023
China’s Asian Infrastructure Investment Bank (AIIB)
has found itself in the news the last two days with the banks
Communications Director, the Canadian Bob Pickard, abruptly resigning,
leaving China and alleging ulterior interference in the bank’s
operations by China’s Communist Party (CCP). With Pickard now back to
Canada, the Canadian government has subsequently ordered a freeze of all
Canadian participation into the AIIB while ‘an investigation’ into
Pickard’s allegations is carried out.
In
this article I unpack this rather strange incident and try and get to
the reality of what happened – and what can be learned from it.
Allegations
Pickard’s
allegations are that while working at the bank (based in Beijing) he
was unable to fulfil his duties due to interference by the CCP. He
stated that “The bank is dominated by Communist Party members and also
has one of the most toxic cultures imaginable. These people are like an
invisible government inside the bank, and this is what I can’t be part
of. I don’t want to be a useful idiot,” he added, without elaborating.
“I don’t believe that my country’s interests are served by its AIIB
membership. As a patriotic Canadian, this was my only course.”
The CCP In China Based Businesses
Chinese
Communist Party members are to be found in all major businesses in
China, including foreign ones. About 10% of China’s population are also
CCP members, meaning a pool of about 97 million. Depending upon the size
of the business, should three or more employees as CCP members be
extant they have the right to form an internal group to discuss business
activities. These may then be discussed with the company management.
They are also discussed or noted by the local CCP offices.
The
intent is to create a direct link between the company and the CCP –
effectively the Government. This is structured this way in order that
any misunderstandings of Chinese laws can be rectified – not a bad
concept in practice. In my business, which employs several hundred
Chinese employees and maintains 12 offices in mainland China, we have
several CCP members amongst our staff. However, in over 30 years of
experience I can say that never has the business experienced any
interference from the CCP. As a consulting practice handling
foreign investors in China, neither can I say I have heard complaints
of this nature from our thousands of clients in China either. This makes
me feel there is something else behind Pickard’s apparent experiences.
The AIIB
In
terms of AIIB itself, it is a Chinese bank, based in Beijing, with
international shareholders. China, India, Russia, and Germany are the
largest equity holders and investors, followed by another 87 countries –
but not including the United States, who were offered equity
participation but declined. With the HQ in Beijing, it is obvious that
the majority of its staff there are Chinese. It should also not be
surprising that it has numerous CCP members working within it.
The
AIIB is capitalised at US$100 billion and has a Triple A rating – the
highest. It is a policy bank, investing mainly, but not exclusively, in
non-China infrastructure projects, often with intent to raise the
well-being of local residents in remoter communities throughout Asia.
The main beneficiary thus far has been India. Projects the AIIB is
funding under their 2023 programme includes investments in Bangladesh,
Singapore, Turkiye, Uzbekistan, and the Philippines. There are an
additional three multi-lateral projects underway, as well as two in
China and one in Hong Kong. You can read all about what they spend their
money on here.
In terms of Canada’s equity stake in the bank, this is minimal at about 1 – 2%. of the total.
Frankly,
the bank does a lot of good work. A question therefore to ask is: Does
CCP involvement within the bank, matter? Western media content has
suggested this is problematic – but without saying why.
Human Resources Issues
There
are conflicting issues I think with Pickard and his ultimate
suitability for that role. He apparently wasn’t a fluent Mandarin
speaker, which from experience I know that in being surrounded by
Chinese staff; can isolate a person. When that happens, some foreigners
in China – and especially working for very much Chinese government
involved entities – can get a bit paranoid. As Pickard was in Corporate
Communications, his work and position, especially when it came to
geopolitics may have been conflicted between the views of the Chinese
government (the largest shareholder) and Western geopolitical views (as a
Canadian). Pickard even said as much, describing himself as a ‘Canadian
Patriot’.
Here
though an HR mismatch appears to arise – Pickard had not worked in
mainland China before, being only previously and exclusively engaged in
Western organisations, and was only in his AIIB Beijing role from March
2022. Given this, Pickard’s complaints suggest bad career and HR choices
than anything more nefarious.
When
understanding this background, it is easy to see how he may have found
his position uncomfortable, in which case he did the right thing in
resigning. That developing paranoia suspicion – alienated from Chinese
colleagues by an inability to speak Mandarin – also carries a clue in
that he apparently feared arrest. Frankly that was extremely unlikely as
being such a high-profile employee with no apparent criminal intent but
does provide a peek into his mindset.
Foreign and North American expats can also get ‘turned’ – reading US-based blogs such as ‘The China Project‘ or ‘Sinocism‘,
(both banned in China) can make Westerners a bit China twisted if
exposed to that type of rhetoric – which is partially their intent.
Rectification
From
AIIB’s own comments, it seems the bank will conduct an internal review
to find out what went wrong. They will probably review their recruitment
process. Therefore, it seems an overreaction by the Canadian government
to throw their toys out of their pram, and freeze engagement with the
AIIB while this is on-going at a corporate level. But what is that
‘corporate level’?
Interestingly, AIIB’s main board comprises of 11 Foreign members and just 1 Chinese national. See here.
In
fact, Pickard should have taken his grievances up with them. It is
never a good look to start pointing fingers at colleagues and spouting
allegations when leaving any company. Which as Communications Director,
albeit even for a short while, Pickard would have known should have been
dealt with internally and discussed with AIIB’s main board, rather than
being disclosed to international media.
Pickard
should have allowed the AIIB board to react. If necessary; and had they
all felt the CCP was acting in a nefarious manner, they could all have
resigned. But Pickard didn’t do that. He went to the foreign media
instead with his allegations. As a result, Pickard has broken AIIB
executive trust.
So
why is the Canadian government now involved? The real truth is
political mileage, not because a Canadian employee couldn’t handle the
work environment in China and had an unfortunate meltdown.
Lessons Learned
There
are salutary lessons to be learned here. Corporate HR should be aware
that new executives may still have internally absorbed post-Covid
stresses, and that placing them in a difficult posting – especially
without the required communication skills or country experience – could
lead to problems. This appears to be the case with Pickard. He was in
the role for just over a year, with Beijing not the easiest city to live
in.
I
visited Beijing for the first time, after covid just a few weeks ago
and there have been many changes, which I outlined in this article here.
Previously, I had lived in the city for ten years and mainland China
for 25. But it is not the easiest posting – which is why many Western
diplomats receive a ‘hardship allowance’ on top of their normal salaries
to compensate for it. Beijing also had a rough time during covid and
only began properly reopening earlier this year, meaning Pickard had
spent a full year in the city under the stresses of lockdowns. That can
be very lonely when not being able to talk to anyone.
What Next?
The
real issue here is the nature of AIIB’s work. Is it helpful? Is it a
useful bank? Is it a bank for good? On the basis of its historical
involvement in Asian infrastructure projects, the answer appears to be a
solid Yes.
But
all businesses in China make mistakes. This, despite the media hype,
appears to be a case of an expatriate employee who was unsuitable for
his role and ultimately couldn’t handle China. That is an HR issue, with
international businesses in China perhaps having to choose the
experienced China hand rather than Western career high-flyers with no
prior China experience – especially when it comes to communications. It
also means that a China career isn’t for everyone – as Bob Pickard has
just proved.
Chris Devonshire-Ellis is the Chairman of Dezan Shira & Associates. He may be reached at asia@dezshira.com