EXPLAINER: What Is Canada’s Involvement in the Beijing-Backed Asian Infrastructure Investment Bank?

Asian Infrastructure Investment Bank in Beijing, on Jan. 16, 2023. (VCG via Getty Images)

Nearly a month after Canada announced it would pause all activity at the Asian Infrastructure Investment Bank (AIIB) while conducting an investigation, Canada still remains invested in the Beijing-founded institution.

On June 14, Ottawa announced it would cease all activity at the AIIB while it investigated allegations made by its former global communications director, Bob Pickard, who claimed shortly after his resignation that the bank was “dominated” by the Chinese Communist Party (CCP), and that it’s not in Canada’s interest to be part of the bank.

Mr. Pickard later said he could not find a “single tangible benefit” in Canada’s involvement with the bank. Furthermore, he said he became alarmed when he discovered the messages he sent to stakeholders were “not the correct ones that match the reality of the organization.”

“The [CCP] runs the joint, but that’s not transparent. It’s only after working there for many months that I became aware of how that’s where the true power is concentrated inside the bank – the CCP crowd who operate like a secret police,” Mr. Pickard said.

The AIIB, China’s multilateral development bank rivalling the World Bank and Asian Development Bank, was created in the name of improving social and economic outcomes in Asia through the financing of infrastructure. It has 106 member governments including most Asian countries along with Australia, Canada, Russia, France, and Britain. Japan and the United States are not members.

An official from the Department of Finance told The Epoch Times that under the direction of Prime Minister Justin Trudeau, the department is conducting an “ongoing” review of the allegations raised by Mr. Pickard “and of Canada’s involvement in the Asian Infrastructure Investment Bank.”

While Canada’s membership in the AIIB remains suspended, its total capital investment has yet to be refunded despite the Liberal government’s and the opposition Conservatives’ concerns regarding China’s influence in the bank’s affairs.

Canadian Investments

When Canada became a member of the AIIB in 2017, it allocated C$256 million to purchase shares in the bank. According to the Condensed Financial Statements of the AIIB ending March 31, 2022, Canada has pledged a total of US$995.4 million to the bank since 2017.

In comparison, Australia has pledged nearly US$3.7 billion, France pledged US$3.3 billion, Germany has US$4.4 billion, and the United Kingdom has US$3 billion. The bank has a total of US$96.9 billion in combined investments.

Canada has 9,954 out of 969,297 total AIIB shares. Since China has 297,804 shares—a 30 percent stake in the AIIB—it has veto power over major decisions, which require 75 percent consensus.

According to the AIIB, any member may withdraw their membership at any time by delivering notice in writing to the bank at its principal office. A withdrawing member remains liable for all obligations to the bank to which it was subject by the date of the withdrawal notice.

As part of the settlement of accounts, when a country leaves the AIIB, the bank will also arrange for the repurchase of the departing country’s shares.

Opposition

While announcing Canada’s suspension of all activity at the AIIB, Finance Minister Chrystia Freeland said Canada would not be “ruling out any outcome” after the completion of a review of its role in the bank, leaving the door open for Canada to leave the AIIB.

The opposition Conservatives would welcome such a move. On the day of Ms. Freeland’s announcement, Conservative MP Michael Chong called the AIIB a “tool of Beijing to export its authoritarian model of governance throughout the Indo-Pacific region.”

Mr. Chong said Global Affairs Canada had previously warned the Liberals that the bank was being used by the CCP to promote its perspectives on governance, economic security, and human rights that “diverge in fundamental ways from Canada’s.”

Back in 2021, then-Conservative leader Erin O’Toole demanded the Liberals stop funding the bank, given the detention of Canadian men Michael Kovrig and Michael Spavor in China.

“When the AIIB was first proposed, it was criticized by the Obama administration as a political tool that the Chinese government would use to expand its influence throughout Asia,” Mr. O’Toole wrote.

“Furthermore, concerns about the AIIB’s environmental records, labour standards, and overall commitment to human rights continue to this day.”

In January 2020, Conservative MP Tom Kmiec received an Access to Information and Privacy response suggesting that then-finance minister Bill Morneau tasked his department with reclassifying federal money sent to the AIIB and other development banks from concessionary payments to full investments.

According to Mr. Kmiec, this would mean the $256 million paid to the AIIB may no longer register as an expense, but would rather show Canada’s membership in the bank as an “investment” that could generate some return.

“Gifting $256 million Canadian taxpayer dollars to the China-controlled AIIB, which is building three pipelines in Asia, is not an ‘investment’ for Canadians,” Mr. Kmiec said.

“An investment implies a return or benefit for Canadian taxpayers. Membership in the AIIB offers neither.”