It can only be hoped that financial services companies who have pinned their colours to China's mast, come to their senses before it's too late, argues Emily Barley

As China enters a downward spiral involving a slowing economy, eye-watering government debt, and a growing unemployment problem, some Western businesses are worryingly over-exposed. Near the top of that list of businesses to watch is Australian banking giant ANZ, which also joins a cadre of financial services companies unconcerned with the way China is stomping on freedoms at home, in Hong Kong, and further afield, and blindly bumbling along in ignorance of the unconventional security threat China poses abroad.

And while the bended knees of HSBC and Standard Chartered, both headquartered in London, to China's oppressive Hong Kong security law met with international criticism, ANZ's dysfunctional relationship with the Chinese state has largely gone un-noticed.

Coming hot on the heels of share price fixing and cartel accusations – currently being heard in court – and concerns rising over the bank's level of exposure in China, the alarm is now being sounded over the bank's Chengdu data centre. This data centre on the Chinese mainland is the bank's 'hub', processing emails and other customer data. If you're wondering where you've read about Chengdu recently, it's the city that recently ordered US diplomats out of the American consulate.

This apparent blindness to the security risks posed by the Chinese authorities leaves CEO Shane Elliott with serious questions to answer. ANZ's Chinese investment and debt strategy is beginning to look reckless, while its data operation in Chengdu looks hopelessly naïve to the point of irresponsibility given China's expanding use of private data held on the mainland in its cyber war against the West.

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The extent to which Shayne Elliott and ANZ have climbed into the pocket of the Communist Party of China (CCP) begins to become clear in the Bogac Ozdemir case. Ozdemir was the bank's global head of credit until he was reportedly fired for daring to express a lack of trust in China's coronavirus response.

After China's army of social media trolls took up the case, pelting Ozdemir and the bank with abuse for daring to say what we're thinking, the bank allegedly received a flurry of phone calls from business interests in China who were presumably acting under orders to boost their 'social credit'. The bank promptly cut its nose off, dumping its most profitable trader and betraying its duty to shareholders.

While the buck ultimately stops with Elliott, it's as yet unknown whether this wacky decision was his own, or whether he's now the hostage of decisions made by incompetent underlings as well as of the CCP. ANZ's lack of comment -F never mind a policy change to limit its exposure in China and protect the free speech of its employees in the rest of the world – makes it difficult to tell.

Brought together, these events paint a picture of an organisation lurching from crisis to crisis with no clear strategy and the smell of panic hanging in the air. At this point we might expect chairman of the board David Gonski to step in, but his hands seem to be tied by his vocal support for Elliott's appointment in the first place and the reliance of his other interests on Chinese students.

While shareholders, investors and customers inevitably reconsider their association with the bank in light of the financial, security, and moral risks involved in its Chinese operations, it can only be hoped that ANZ, and the other financial services companies who have pinned their colours to China's mast, come to their senses before it's too late.

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