China’s AIIB And The Canadian Communications Director
Updated: June 20, 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.”
We have subsequently learned from within AIIB that Pickard’s colleagues were mostly international employees rather than Chinese. As such, these personnel would not have been CCP members and infer a serious communications problem between numerous AIIB staff and Pickard. No doubt such colleagues would be also displeased to be associated with Pickard’s remarks. This also focuses attention on a potential paranoia as a root cause of his issues.
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. We are also aware that about half of that time was actually spent in Canada, well away from the bank, which is hardly a major career commitment to a global communications role involving a China-based corporate. The working hour time differences alone are significant, let alone the issues of embedding oneself properly in the job.
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 at least half of his time in a Chinese 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
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