Imagine if the situation took place in Quebec. If the authorities discovered that the recently announced mega wind turbine project north of Mont Sainte-Anne had been awarded in exchange for bribes of 100 million…
Posted at 6:30 a.m.
The scandal would be titanic, wouldn’t it? However, this situation is exactly that described by the American authorities in legal proceedings linked to solar energy projects in India of which the Caisse de dépôt et placement is the promoter.
According to indictments, three former Caisse executives participated in a bribery scheme to obtain solar energy contracts in southern India1. Their share of the scheme was to reach 83 million US dollars, or more than 100 million Canadian dollars.
The projects at the heart of the accusations of corruption by the subsidiary Azure Power Global are comparable in size to that of Hydro-Québec near Mont Sainte-Anne announced on November 27, worth $1 billion.2.
For comparison, the largest bribe ever paid in Canada would be that of SNC-Lavalin (now AtkinsRéalis) for the McGill University Health Center (MUHC) project, at 22.5 million. Internationally, SNC-Lavalin was also accused of having paid 47 million between 2001 and 2011 for contracts in Libya.
In short, the amounts of corruption are probably unprecedented for a Quebec organization.
That’s not all. My colleagues Julien Arsenault and Hugo Joncas also discovered that the Caisse had paid very dearly – too dearly – to acquire a highway in India, in the fall of 2022. However, it turns out that the three executives accused of corruption in the Azure affair also played a key role in the subsidiary that owns the highway3.
This highway – Eastern Peripheral Expressway – was paid the equivalent of 1 billion dollars, almost twice what the closest competitor offered in the call for tenders (575 million).
Worse still: the management of the highway today raises the ire of the Indian authorities. Cracked roads, faulty signage, insufficient rest stops, the problems are numerous. Additionally, the toll road company lost the equivalent of $35 million in the annual fiscal year ended March 31, 2024, up 38% from the previous year.
Misery…
The $1 billion at risk in Expressway adds to a loss of some $500 million in Azure. These funds, it should be remembered, are the contributions of Quebecers managed by the Caisse on behalf of Retraite Québec, RREGOP or the Commission de la construction du Québec, among others.
Several questions emerge from this affair. First, had the Caisse ensured the integrity of its representatives in managing the hundreds of millions entrusted to them, more than 11,000 km from Montreal?
In this type of acquisition abroad, seasoned private entrepreneurs send a relative in whom they have complete confidence to control the finances.
“A manager who was brought up in the company needs to take control of the cash and impose the way things are done. The operation can be managed by local managers, but the money should have been controlled by a Quebecer,” a former senior manager of the Caisse de dépôt explained to me.
Obviously, the three executives accused of corruption in Azure were not close to the Fund. Cyril Cabanes is a French and Australian citizen who acted in Asia-Pacific as vice-president, infrastructure, on behalf of the Caisse. The other two were Indian residents.
As for Alan Rosling, he was not close to the Fund either. The Briton who became chairman of the board of Azure in September 2021 was appointed after a suggestion from a global recruitment firm.
Mr. Rosling is not accused, but had knowledge of the bribery scheme, according to the statement by investigators from the Securities and Exchange Commission, the American agency which filed the corruption charges.
Rosling ultimately left his position in mid-October 2023 and Cabanes at the end of October 2023, according to public documents, 13 months after the first public signs of impropriety at Azure.
Second big question: has the Fund verified all the other files of the three accused of corruption, who had been in the service of the institution for several years? Has she also scrutinized the other international investments of the Direct Participation Fund to ensure that the structure put in place is flawless?
Third big question: will the person ultimately responsible for the situation at the Fund be punished? At the top of the pyramid, isn’t there someone who must answer for their management decisions?
Azure and the Indian Highway report to Emmanuel Jaclot, who became senior vice-president and head of infrastructure at the Caisse in 2018, replacing Macky Tall4.
To date, the scandal has had no effect on Mr. Jaclot’s compensation. The manager was the second highest paid at the Caisse in 2023, at nearly $3 million, which includes a performance bonus of $2.4 million.
The Caisse’s spokesperson, Jean-Benoît Houde, told me that the Caisse acted quickly with the executives directly involved. “The three individuals who lied to the authorities also lied to the Fund. We fired them as soon as we found out what was happening,” Mr. Houde explains to me.
Fourth big question: is the Caisse’s strategy of investing directly internationally or with majority stakes the right one? Should she be content to be present indirectly?
At the Caisse, Mr. Houde replies that the Azure and Maple Highways (Indian highway) files should not be mixed. He asserts that the Caisse could have rejected the transaction after having read the other lower offers, but it judged that the game was worth it, after rechecking its hypotheses. And today, the asset’s performance would be in line with expectations.
Well…
1. Read “Three former Caisse executives accused of corruption”
2- The Caisse de dépôt solar projects in India which are at stake are more impressive in terms of installed capacity (3000 MW) than the Saint-Ferréol-les-Neiges wind project (1564 MW), but as the load factor of wind power is often twice as much as solar, the two are comparable.
3. Read “Key roles for ex-executives accused of corruption”
4- Macky Tall was in charge when the Caisse started investing in Azure in 2016.
