Class Action Against Azure Power Global | The CDPQ team singled out

Azure Power Global’s senior management – ​​including a member chosen by the Caisse de depot et placement du Québec (CDPQ) – is being harshly criticized in a class action. He is criticized for his laxity with shareholders before the stock market debacle that occurred last summer and which cost several hundred million to the woolen stockings of Quebecers.

In addition to combing through the allegations of irregularities that undermine its activities, the Indian producer of renewable energy – in which the Quebec institution has invested more than half a billion dollars – is plunged into a legal battle.

“The actions and omissions of the defendants caused a precipitous decline in the value of the company’s shares and [les demandeurs] have suffered significant loss and damage,” argues the motion, filed in New York courts and that The Press was able to consult.

These allegations have not yet been proven in court and the amounts claimed are not quantified. Azure says it intends to “defend itself vigorously”. The CDPQ declined to comment on Friday.

However, the approach is likely to escalate. An amended petition is expected in the coming weeks. It may reflect the recent turn of events. On January 25, Azure notably revealed new skeletons in its closet in addition to warning that the money in its coffers could be insufficient to meet its obligations.

Alongside the company, four individuals are singled out, including Alan Rosling, chosen by the CDPQ to take the reins of Azure’s board of directors in October 2021. This businessman who worked in India also temporarily served as CEO last year.

The other people are Ranjit Gupta (boss from July 2019 to April 2022), Harsh Shah (chairman for just two months last summer) and chief financial officer Pawan Kumar Agrawal.

All these managers were appointed as the CDPQ took more and more place within the shareholding of Azure. It now controls 53% of the company, ahead of the Ontario Municipal Employees Retirement System (21.5%).

overwhelming silence

The defendants are accused of having waited too long – until August 29 – before announcing an internal investigation into potential irregularities when a whistleblower had come forward three months earlier. For several months, Azure gave the impression that everything was going like clockwork when it was not, the document points out.

Mr. Rosling and the other executives had nevertheless been alerted about potential manipulations of data, which testified to inefficiencies in internal controls, say the complainants. Nevertheless, Azure has decided to wait before taking stock publicly, they lament.

On the floor of the New York Stock Exchange, Azure had seen its share price plunge by 44% after revealing the first irregularities. The title has still not risen. It was trading on Friday at around US$4.15. At its peak, in early 2021, the CDPQ investment was worth approximately US$1 billion. It melted to 142 million US.

According to Patric Besner, vice-president of the Institute for the governance of private and public organizations, the plaintiffs’ strategy in this case is to “paint those responsible in a corner”.

In nothingness

“Either management knew about it and did nothing, or it should have known something was wrong,” sums up the expert. We use big words [dans la requête], but whether that will work remains to be seen. It’s hard to say at this point. »

Several questions – such as an update on its finances and the identity of its next leader – are still unanswered at Azure.

However, three other solar projects are known to show irregularities, while only one was previously the subject of allegations. In addition, a special committee of the board of directors examines the contracts of the last three years to verify whether there have been acts of corruption or other irregularities.

He is also investigating allegations of wrongdoing against former executives, who have not been named.