The Caisse de dépôt et placement du Québec won its case against the former boss of its subsidiary Otéra Capital, who claimed $8.4 million from it for “unjustified dismissal”. The Superior Court concluded that his “serious interference with his duties as an employee and senior manager” justified “his dismissal without notice.” The nest egg of Quebecers will still have to pay the $768,000 in bonuses.
As part of an internal investigation, Alfonso Graceffa admitted to having received $15,000 in cash from an individual with a criminal history of drug trafficking, in the Caisse’s own offices, in 2017.
The number one of the real estate loan subsidiary withdrew from his functions following an investigation by the Montreal Journal about his conflicts of interest and other leaders’ ties to organized crime.
The act of the highest manager of a Caisse subsidiary accepting an envelope filled with thousands of dollars in cash raises clear concerns of irregularities, embezzlement and even money laundering.
Andres Garin, judge
“This breach of Graceffa’s obligations has irremediably broken the relationship of trust between [la Caisse] and Graceffa and constitutes a serious reason justifying his dismissal without notice,” he concludes.
The magistrate therefore refuses to the former senior manager of the Fund almost all the amounts he claimed: 5.5 million in compensation and nearly three million in bonuses and damages.
The $768,000 he grants to Graceffa was owed to him before his dismissal, so the Caisse must pay it to him, he decides, however.
Joined by The Press, Alfonso Graceffa explains that he is “considering” the possibility of appealing. “Everything is possible, but I prefer not to comment,” he said.
The Caisse is delighted that the judge recognized the “serious reasons” given for his dismissal, said its spokesperson, Kate Monfette. “We are also satisfied that the Court has confirmed that no severance pay was payable to Mr Graceffa in the circumstances. »
“Debt recovery”
In his decision, Judge Garin recalls how the former boss of Otéra carried out “debt recovery” for a company he operated with his brother, Construction Sainte-Gabrielle.
The individual with a criminal past who gave him the $15,000, Jean-Denis Lamontagne, had no declared income and was still not discharged from bankruptcy, according to a note which had been given to him, but which Graceffa said not having read.
The former CEO had not declared his work for Sainte-Gabrielle to his employer, which also helps to justify his dismissal, according to the judge.
” Conflicts of interest ”
The court also held against Graceffa his failure to declare to the Caisse the extent of his relations with his “friend and partner” Thomas Marcantonio, with whom he owned buildings.
In addition to being in business with the boss, this real estate investor and mortgage broker was both a client and supplier of the Caisse.
Marcantonio borrowed money from the Otéra subsidiary to finance some of its projects, such as the Quartier St-Jean, a residence for the elderly in which his company is a partner. He also passed business opportunities to Otéra as a mortgage broker: loans that the Caisse subsidiary granted to its clients, like a bank.
Graceffa had declared his relations with this client and supplier, but he had not said everything: the CEO of Otéra himself made private loans with his own money to clients of the broker Marcantonio. Graceffa thus granted millions in loans without saying a word to the Caisse, according to the out-of-court interrogation filed as evidence.
In May 2019, the CEO of the Caisse, Michael Sabia, invited the media to a press conference. He then presented a “summary” of the conclusions of his independent investigation, carried out at a cost of five million dollars, according to him.
Without naming anyone, the Caisse then deplored “serious and unacceptable failings” at Otéra and announced that four people had left the organization. A press release published that day mentioned several of the facts that the judge found against Graceffa, but without naming him.
The Fund then published another press release explaining that three people, including Graceffa, had “no longer any employment ties with the company”. In short, the former CEO would not return to his position.
According to Judge Andres Garin, “there is no doubt that (his) public statements on the investigator’s report and the termination of Graceffa’s employment have discredited him.” “However, by making these declarations, (the Fund) did not commit a civil fault,” he specifies.
Journalistic investigation
In 2019, The Montreal Journal had triggered a real commotion at the Caisse by revealing mafia links between leaders of the organization and a series of conflicts of interest of the CEO of the real estate loan subsidiary, Alfonso Graceffa.
The daily explained in particular that Otéra had lent 44 million to Quartier St-Jean, a company in which a company of its partner Marcontonio was a sponsor.
Quebecor also mentioned that a subsidiary of Otéra, MCAP Financial Corporation, had granted more than nine million in loans to real estate companies of Graceffa and Marcantonio.
Following questions from Montreal Journal and even before the publication of the first article, the Fund had launched a vast internal investigation, entrusted to the law firm Osler.
Two days after the revelations began, the Caisse announced that Graceffa was withdrawing “from all her functions in the Caisse’s real estate subsidiaries” during the independent investigation. He therefore left not only Otéra, but also Ivanhoé-Cambridge, where he was head of the business units. In the end, he never came back.
Learn more
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- 28.9 billion
- Value of Otéra Capital’s real estate loan portfolio, as of December 31, 2022
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