The Caisse de depot et placement du Québec (CDPQ) must tighten its practices to avoid the risk of conflicts of interest, fraud and corruption in its investments, indicates a report by the auditor general of Quebec Guylaine Leclerc.
The document filed Wednesday highlights several insufficient practices to avoid these situations within the institution and two of its subsidiaries, Ivanhoé Cambridge and Otéra Capital.
Ms. Leclerc’s team carried out its audit work last year on the activities of the CDPQ and its subsidiaries during the period from June 2019 to May 2021.
Two findings reveal shortcomings in the verifications that precede the decision to invest in a company and in the assessment of the risks of conflicts of interest.
Fraud risks
The auditors note in particular a lack of precision on the information which makes it possible to check the background of the potential partners of the CDPQ, such as their date of birth or their place of residence.
“Without this type of information, a stakeholder’s background check may uncover a situation related to a different person with the same name as that stakeholder,” the report said.
Ivanhoé Cambridge, for its part, did not systematically check the sellers of the real estate properties it acquired. “A malicious organization or individual can use a real estate transaction to commit fraud,” the auditors point out.
Even when due diligence is carried out, the relevant information does not always make it to the decision-makers responsible for approving transactions, the report also shows.
For six CDPQ investments and one Ivanhoé investment, the auditors noted that a risk to their reputation had been identified. This information was not passed on to the approval committees.
The report highlights in particular a case where “worrying allegations” remained unaddressed.
A manager in conflict of interest
Ms. Leclerc’s team also highlights weaknesses in the management of conflicts of interest.
In particular, a CDPQ officer was able to participate in discussions surrounding a transaction even if he was in a conflict of interest situation.
“He had a close relationship with a senior executive of the company targeted by this investment,” the report said. Consequently, the manager of the Caisse should have been excluded from any intervention relating to the investment in question. »
According to the facts set out in the report, this leader did not disclose his situation until the end of the process, that is, three weeks after having participated in the first discussions in this file.