Red bank no less

A bank positioning itself as the Asian response to Western-influenced multilateral lenders has been exposed as an institution controlled by the Chinese Communist Party and is being leveraged to influence Asian nations.

The Asian Infrastructure Investment Bank (AIIB), established under the initiative of China, recently appointed Zou Jiayi as its new president at its annual meeting in Beijing after being nominated by the Chinese government.

Zou is a member of the Central Committee of the Chinese Communist Party and a deputy secretary-general of the Chinese People’s Political Consultative Conference, or CPPCC, the country’s top political advisory body.

The appointment was seen as removing all pretensions of AIIB being independent of the Chinese government, as it was not clear if there were other candidates aside from Zou, whose five-year term starts on 16 January next year. She succeeds Jin Liqun, the founding president of the lender, who will complete his 10-year tenure.

Most AIIB loans to the Philippines are co-financed with the ADB or the World Bank and are estimated to total $2.5 billion.

Jin, nonetheless, hailed Zou’s experience in international development finance, saying she will steer the AIIB “to move forward on the right track.”

Despite the veneer of independence, Chinese President Xi Jinping had linked the establishment of the AIIB to China’s Belt and Road Initiative, aiming to invest in infrastructure in the region.

In a speech to the Chinese Communist Party Congress, Xi stated that both were part of “all-round efforts in the pursuit of major country diplomacy with Chinese characteristics, thus advancing China’s diplomatic agenda in a comprehensive, multilevel, multifaceted way and creating a favorable external environment for China’s development.”

With China holding 26.6 percent of voting rights, it effectively has veto power over major decisions, and the bank can align with China’s strategic objectives, such as the Belt and Road Initiative.

A whistleblower, Bob Pickard, who resigned as the bank’s global communications director two years ago, alleged that the bank was “dominated” by members of the Communist Party. He said the new president underscores his claim.

“Her appointment signals the Communist Party’s continued strategy of placing trusted political cadres in key international institutions like the AIIB,” Pickard told Nikkei in an interview.

He said Zou “is being rubber-stamped as the new president of AIIB” from senior positions in the Chinese political leadership.

“AIIB keeps insisting that it is ‘apolitical’ but this appointment communicates the opposite message,” he added.

Pickard’s departure from AIIB was tumultuous, prompting Canada to review its membership in the institution.

The reason Pickard gave for his resignation was the Communist Party’s sway and the institution having “one of the most toxic cultures imaginable.”

He warned that Canada’s interests as a member of the bank were not being served, which led Ottawa to launch a review and indefinitely suspend its participation.

Outgoing AIIB president Jin dismissed Pickard’s allegations as “baseless.” He referred to an internal review published within a month of Pickard’s resignation, led by a Jin-appointed general counsel.

It “found no evidence to support or validate” the allegations and said the AIIB has an “apolitical, constructive, balanced and consensus-oriented decision culture.”

The fragmentation of the global financial system appears to be underway, with the AIIB taking its cue from the communist leaders.