Canada freezes ties with AIIB after ‘communist dominance’ claims

The move over the AIIB comes amid a continued fraying of ties between Ottawa and Beijing, which took a turn for the worse in 2018.

Canada has said it is freezing ties with the China-led Asian Infrastructure Investment Bank (AIIB) while it investigates claims by a former senior member of staff that the institution is dominated by the Chinese Communist Party.

Finance Minister Chrystia Freeland announced the move on Wednesday, after Canadian Bob Pickard, the AIIB’s global communications director, resigned from his job and criticised the bank as “dominated by the Communist Party”.

Freeland said she did not rule out any outcome of the investigation, a hint that Ottawa could pull out of a bank it officially joined in March 2018.

“The government of Canada will immediately halt all government-led activity at the bank. And I have instructed the Department of Finance to lead an immediate review of the allegations raised and of Canada’s involvement in the AIIB,” Freeland told reporters.

The AIIB, seen by some as a Chinese rival to the World Bank and Asian Development Bank, was founded in 2016 to finance railways and other infrastructure. It has 106 member governments including most Asian countries and Australia, Canada, Russia, France and the United Kingdom. Neither Japan nor the United States are members.

The AIIB rejected 58-year-old Pickard’s criticism as “baseless and disappointing” and said it was proud of a staff representing 65 different nationalities.

The Chinese embassy in Ottawa said the claims were “pure sensationalism and a complete lie”.

Pickard, who worked with the Beijing-based AIIB for 15 months, said on Twitter that resigning was his only option as a “patriotic Canadian”. He complained the bank was dominated by “Communist Party hacks” who were “like an in-house KGB or Gestapo or Stasi” — the secret police of the Soviet Union, Nazi Germany and communist-era East Germany.

The bank “has one of the most toxic cultures imaginable,” Pickard added. “I don’t believe that my country’s interests are served by its AIIB membership.”

The move over the AIIB comes amid a continued fraying of ties between Ottawa and Beijing, which took a turn for the worse after Canada arrested a Huawei senior executive on a US arrest warrant in December 2018, and days later China arrested two Canadians, eventually accusing them of espionage.

The two men – Michael Spavor and Michael Kovrig – were eventually released in 2021 after US prosecutors dropped the extradition proceedings.

“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,” Freeland said, as she announced the investigation into the AIIB.

‘Undue’ influence

It was Prime Minister Justin Trudeau who took Canada into the AIIB, with the opposition Conservatives long demanding Ottawa pull out of the bank, saying it is a tool for Beijing to export authoritarianism.

The Royal Canadian Mounted Police announced on Tuesday it was investigating allegations China tried to intimidate a federal Conservative legislator.

Canada has accused China of trying to meddle in its affairs through various schemes, including operating illegal police stations, and election interference. Beijing has denied the allegations.

The AIIB has $47.4bn in assets, according to the bank’s 2022 financial statement, and is headed by its president, Jin Liqun, a Chinese national. Its vice presidents include a Briton, a Russian, an Indian and a German.

Pickard said he left China hastily because he was concerned for his safety, after what had happened to the two Michaels.

He only posted his announcement when had arrived in Japan.

Speaking to the Agence France Presse (AFP) news agency from Tokyo, he said the bank directed lending primarily to countries involved in China’s controversial Belt and Road Initiative, and that the CCP wielded “undue” influence over every aspect of its operations.

“It’s a resource to the geopolitical goals of the PRC (People’s Republic of China) … in practice, I believe it serves China’s interest,” he told AFP.

In 2017, then-vice president Thierry de Longuemar defended the bank against similar accusations.

“China’s wish isn’t to create a new instrument of the Chinese state, it is to demonstrate its ability to promote a truly international institution based in China,” he said.