Allegations of ethical problems shaking the Indian subsidiaries of the Caisse de dépôt et placement du Québec demonstrate the difficulties of doing business in markets where business practices are different from those in the West, says a governance expert and the official opposition in Quebec.
Posted at 4:38 p.m.
“This demonstrates the nuance between being an operator and an investor,” summarizes the director of the Institute on the Governance of Private and Public Organizations (IGOPP), François Dauphin. It’s a fundamentally different mission to operate [être aux commandes d’une entreprise] and invest. »
Mardi, The Press revealed that the nest egg of Quebecers had received, as early as 2022, information on serious ethical problems in its subsidiaries in India. Our report explained that several red flags targeted one of his three ex-executives accused of corruption last October in New York.
Read “Corruption in India: Several Red Flags”
The Quebec retirement plan manager confirmed that these reports were indeed made to its Montreal head office. He goes over some of them with a fine-tooth comb.
These allegations come from a former legal affairs manager employed by the Caisse’s main Indian subsidiary, CDPQ India Private Ltd (CDPQ India).
When it began to sound the alarm, in 2022, Azure Power Global, an Indian solar energy producer controlled by the Quebec institution, was mired in a corruption scandal, according to American prosecutors. In 2023, allegations of irregularities also targeted Maple Highways, another Indian subsidiary of the Caisse which operates private highways.
It is especially Saurabh Agarwal, general manager of CDPQ India until July 2023, who is concerned by the whistleblower’s allegations.
“We think we have put a few individuals in place to control, but that does not seem to be the case,” explains Mr. Dauphin. Codes of ethics may not apply so easily everywhere. There is a lesson to be learned from these investments which make us play the role of operator. »
Read “Company control: the Fund is playing with fire”
Political echoes
The affair also concerns the official opposition in Quebec. Liberal finance spokesperson, Frédéric Beauchemin believes that “the Caisse’s internal processes are perhaps not up to the task of intervening in a country like India.”
For the MP, the setbacks of Quebecers’ nest egg with Azure and Maple Highways demonstrate that he has difficulty pulling the strings himself in these markets. “It is clear that in these cases, it was clearly not to the Caisse’s advantage. »
Tuesday afternoon, the office of Minister of Finance Eric Girard, responsible for the Fund, did not respond to our questions.
The three former Caisse executives are accused of having participated in a corruption scheme aimed at obtaining contracts for Azure Power Global. Agarwal notably wanted to use funds from the Indian subsidiary of the Fund to finance the school attended by his own son, according to the allegations.
He also allegedly tried to hire a friend’s law firm in a major transaction in addition to pressuring subordinates to change CDPQ India’s financial data.
The Caisse, which affirmed to The Press that the file is “still under investigation”, refuses to give the slightest detail on its verifications.
More transparency, demands the official opposition
The official opposition denounces the opacity of the Fund regarding its governance problems in India. The Liberal finance spokesperson, Frédéric Beauchemin, believes that François Legault should get involved personally.
“It is obvious that from the Prime Minister’s office, there should be a request to obtain more transparency on this fraud,” he said, in reference to the accusations of corruption against three former executives of the Caisse.
Frédéric Beauchemin believes that the public deserves to know how the leaders of the Caisse’s head office handled these problems.
“How come there is not more knowledge of responsibilities up to the head office? There, we talk all the time about branches far away in India, about the world at a distance from the Caisse office here in Montreal… But the Caisse’s operations are centralized in Montreal… At one point, there is someone ‘one who should be in the hot seat…’
The MP wonders if the Fund neglected the verifications on the allegations received in 2022 concerning the leadership of CDPQ India Private Ltd. “If this is the modus operandi, what else could be hidden in their record? »
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- 2016
- Year when the nest egg of Quebecers opened its office in the Indian capital New Delhi.
Caisse de dépôt et placement du Québec
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