How the Caisse found itself in the path of a controversial multi-billionaire

What led the Caisse de dépôt to do business with Indian multi-billionaire Gautam Adani, a close friend of Prime Minister Narendra Modi with a sulphurous reputation?

• Also read: Corruption scandal in India: did the Fund try to cover up the affair?

• Also read: Did the Caisse de dépôt approve the payment of bribes in India?

• Also read: Indian tycoon Gautam Adani indicted for corruption, his group falls on the stock market

We have to go back to March 2016, when the Fund decided to open an office in Delhi. The previous year, its great Toronto rival, the Canada Pension Plan Investment Board, had broken the ice by setting up in Mumbai.

“We believe that India stands out as an exceptional country in which to invest,” declared the CEO of the Caisse, Michael Sabia, referring to the Modi government’s desire “to carry out essential economic reforms”.

To lead this new office, the Fund is recruiting Anita George, a former director of the World Bank. In 2018 and 2019, she was one of the highest paid executives at the Caisse, receiving $2 million per year.

A premier par of $99M

In early October 2016, Mr. Sabia visited Mumbai, where he delivered a speech to business people. Around ten days later, the Caisse made an initial investment of $99 million in Azure Power Global. It reinvested there three times before the end of 2016, which then gave it a 21% stake in the Indian solar electricity producer.

In January 2017, Azure appointed a Singapore-based Caisse executive, Cyril Cabanes, to its board of directors. “We are happy that Cyril represents us”, underlined Michael Sabia at the time.

Along with two other former employees of the institution, Mr. Cabanes is currently the subject of accusations by the American authorities in connection with an alleged conspiracy involving Azure and a subsidiary of Gautam Adani’s conglomerate, Adani Green Energy.

From 2018 to 2022, the Caisse put more than $500 million into Azure Power, which increased its stake in the company to more than 53%.

Negotiations from 2020

According to US authorities, it was in 2020 that the corruption scheme between Azure and Adani Green began. This provided for the payment of more than US$250 million in bribes to Indian officials to obtain lucrative contracts, including US$89 million from Azure.

US authorities maintain that Mr. Adani met with representatives of Azure Power in December 2021 and April 2022 to discuss the alleged plot, which ultimately never materialized.

Gautam Adani’s rapid enrichment and his proximity to Narendra Modi have fueled suspicions of corruption and nepotism for years. In 2014, he was acquitted of financial conspiracy charges.

High risks

The Fund has gradually deployed in India despite the high risks of corruption that exist in the country. Like other foreign investors, the institution is attracted by India’s strong growth. It currently owns $9 billion in assets there, including buildings and highways.

Before establishing yourself in highly corrupt countries, “we must provide various additional mechanisms,” notes Denis St-Martin, professor at the University of Montreal.

Interestingly, it was only in October 2020 that the Caisse adopted its first policy on fraud and corruption.

Marc-André Blanchard, the vice-president responsible for international relations at the Caisse, has visited India a few times in recent years. This summer, he met Mr. Modi at a conference in Delhi.

The CEO of the Caisse, Charles Emond, made his first trip to the country this spring. India ‘really found the formula’ for attracting foreign capital, he told the newspaper The Economic Times.

The Fund recently clarified Journal that it was currently carrying out “necessary checks” to ensure that its other investments in India were not affected by irregularities.

In a few dates

Mars 2016

The Caisse de dépôt opens an office in Delhi.

October 2016

The Caisse makes its first investment in Azure Power Global.

2020

Azure Power CEO Ranjit Gupta participated in conspiracy with Gautam Adani, according to the US Department of Justice.

December 2021

Gautam Adani meets with Mr. Gupta and another Azure executive, according to the Securities and Exchange Commission (SEC).

Avril 2022

Mr. Adani meets again with Ranjit Gupta, according to the US Department of Justice. A few days later, he met Rupesh Agarwal, who will succeed Mr. Gupta as head of Azure in August.

November 2024

The US Department of Justice and the SEC file charges against Gautam Adani, three former Caisse executives, two former Azure executives and two former Adani Green Energy executives. The Caisse maintains that its ex-employees lied to it.