Who’d turn down a role to lead one of the world’s largest sovereign wealth funds? Quite a few people, it seems - prime candidates for the top job the $500bn China Investment Corporation (CIC) have turned it down.
Premier Li Keqiang, who carries most of the weight in choosing CIC’s boss, is probably not an easy man to say no to, said one recruiter who asked not to be named, “but knowing China and the way it operates, it all depends on what else is on offer…if you know what I mean.”
So far the CIC role has been snubbed by two high-profile candidates, said the FT. Shanghai vice-mayor Tu Guangshao and Yi Gang, a central bank deputy governor both declined. CIC, which was established in 2007, has been lambasted for poor investment performance, and it is said that key candidates don’t want to walk into a hornet’s nest.
“Accepting this role would mean all decisions are made and vetted by a political committee that may not be prepared to make the right decision if it also happens to be the unpopular decision," said the recruiter. "So the chairman would be operating with one hand tied behind his back. And if you don’t deliver, you’re setting yourself up for a fall.”
Despite the apparent reluctance of people within Party ranks to move into the role vacated by Lou Jiwei when he became finance minister in March, another recruiter said that he’d be “staggered if they gave it to a non-national”, notwithstanding how embarrassing the current vacuum must for China’s leadership.
“Because this is China, it would be horrendously difficult to navigate through that landscape without knowing where the bodies are buried and who to go to when you need to get things done,” he said.
But another agency head, who also asked not to be named, scoffed at the notion that jobs like this couldn’t be filled: “In the current financial and economic climate there will always be a sufficient supply of quality candidates. There is no shortage of candidates for C-suite roles – private sector or government-related. The market is synonymous with being supply heavy thanks to the reducing spectrum of bank jobs.”
Even so, moving from the private sector to a sovereign requires a fundamental shift in mindset from doing what is in the best interests of shareholders to aligning with more complicated political agendas. And, sometimes, there have been unsuccessful outcomes.
Chip Goodyear, former BHP Billiton mining boss, discovered that migrating to a state investor was more difficult than he had anticipated. He quit the chief executive role of Singapore’s Temasek before he had even taken office. Goodyear joined the Temasek board in March 2009, and only month's later resigned, it is alleged, when it became clear that he would not be granted the freedom of action he expected once behind the CEO’s desk.
Similarly, some Middle Eastern sovereign wealth funds have recruited top private sector expats for leadership positions, but many had found themselves similarly constrained from operating in they had become accustomed. “And,” said the recruiter, “China is even more fraught than the Middle East.”
But it’s not just large sovereigns that struggle to fill top roles. Financial institutions that have a tarnished reputation don’t find it easy to appoint the best talent without significant inducements. A good example is the hole left in Barclays’ leadership when CEO Bob Diamond was booted out.
One recruiter who focuses on board-level appointments said that the roles now held by Antony Jenkins, group CEO, and Hector Sants, head of compliance and government and regulatory relations, had been a struggle to fill.
“As global head of compliance, if something goes wrong, his head is very much on the block. You have to ask why, having just been given a knighthood, Sir Hector would have taken on such a role, unless it was made extremely worthwhile, financially.” Lord Sants, anyone?