The Caisse de depot de placement du Québec, which manages $365.5 billion, must strengthen the protection and detection of conflicts of interest, fraud and corruption related to its investments, pleads the auditor general.
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In 2019, a series of reports published by our Bureau of Investigation prompted the Caisse to launch a major $5 million internal investigation and led to the dismissal of its CEO, Alfonso Graceffa, and two-thirds of the members of its board of directors. administration.
The subsidiary had granted a loan of $3.3 million to a firm of the CEO and his ex-wife for the financing of an income building in Côte-Saint-Luc.
Following these revelations, the Caisse undertook to improve its ethical practices to bring them into compliance, reports the Auditor General.
However, even today, “key steps in the investment process” are not always carried out in accordance with the policies, in particular those relating to conflicts of interest, reports the Auditor General in her report tabled Wednesday in the Assembly. national.
Several observations
The auditor’s audit covers the period from June 2019 to May 2021 and covered the Caisse’s private placements and mainly the activities of its subsidiaries Ivanhoé Cambridge and Otéra Capital.
Although measures have been put in place, the auditor found that some elements still need to be improved, such as:
- The absence of policies and guidelines devoted to the risks associated with money laundering;
- The conflict of interest management procedure came into effect late in December 2020 at Ivanhoé Cambridge. Before that, the branch didn’t provide any;
- Identification diligent the people with whom it deals;
- Due diligence of parties related to investments;
- Delays in the production of declarations of interests of its staff and directors.
Moreover, for six investments by the Caisse and one by Ivanhoé Cambridge, due diligence had revealed that there was a risk to their reputation, but that this information was never reported to the approval committees.
The auditor reveals that for a major investment, there was an outflow of funds before approval, while a Caisse manager who had participated in the discussions leading to this investment also had a close relationship with a senior executive of the target company. The VG recalls that this leader should have been excluded from the interventions. However, he did not declare his conflict of interest.
Sometimes, the Caisse withdraws funds of several tens of millions before obtaining authorization for the investment by an approval committee.
International markets
The VG reports that the fund’s investment orientations have evolved towards private markets such as infrastructure and private placements, which generates more risk in terms of conflicts of interest, fraud and corruption. Moreover, investments on international markets for Quebecers’ wool socks increased by $137 billion between 2015 and 2020.
“The globalization of its activities has enabled it to seize attractive investment opportunities in several countries. However, this globalization also generates additional challenges with regard to risk management (…) particularly in terms of ethics”, relates the report.