The Caisse de depot et placement du Québec lent nearly $21 million to a Terrebonne shopping center in which one of its senior executives had a financial interest. And when she put an end to this conflict of interest, in the midst of a media crisis, she sheltered the affair.
Our Bureau of Investigation has just discovered confidential internal documents which expose what really happened behind the scenes, in May 2019, when the Caisse discovered this other major conflict of interest in its senior management.
The Caisse concealed that Paul Chin, first vice-president and chief investment officer of its subsidiary Otéra Capital, had a personal stake in a shopping center in Terrebonne.
Otéra held mortgages totaling $20.7 million in Center Lachenaie, which are still active today.
The president of the Caisse at the time, Michael Sabia, did not slip a word of it during his press conference on May 28, 2019, organized to reveal the result of a vast internal investigation of $ 5 million on his subsidiary. Otera Capital.
This investigation had been urgently ordered after revelations from our Investigation Office on other breaches of ethics at Otéra Capital.
During his press briefing, Michael Sabia said that Otéra, the Caisse’s commercial loan subsidiary, had done a major internal cleaning and that four of its leaders had been fired. He had even thanked our Bureau of investigation for having unearthed this vast affair of conflicts of interest.
But he had not released the full report, contenting himself with making the five-page summary public.
The Fund has always refused to make the full report public since. When we contacted the Caisse in recent weeks about the Lachenaie Center, the institution claimed that Paul Chin had declared this conflict of interest “as early as 2013”.
If so, very few people seemed to know on February 26, 2019, when two Otéra executives sent their teams an urgent email about it with the header “IMMEDIATE ACTION.”
Paul Chin was then ordered, among other things, to sell his shares within three months, and to refrain from participating in decisions concerning the contracts that Otéra concluded with a list of companies and individuals.
We asked the Caisse why it had not acted transparently at that time. The institution replies that the major cleaning of 2019 made it possible to highlight “two categories of elements”.
On the one hand, “serious shortcomings of certain people”. On the other hand, “recommendations to strengthen the processes”.
“These two categories, very distinct from each other, required different interventions”, justifies Otéra, who assures that “Mr. Chin acted in a transparent and collaborative manner” during the discoveries of 2019.
The institution ensures that Mr. Chin no longer holds any stake in the Center Lachenaie.
– With the collaboration of Philippe Langlois
▸ Recall that the external firm Osler had obtained more than 1.5 million documents and conducted dozens of meetings during its investigation, which mobilized 120 people, in 2019.
Courtesy picture
Paul Chin, Senior Vice-President and Chief Investment Officer at Otéra
The Caisse did not want to quantify the value of Paul Chin’s participation in the Center Lachenaie, when we questioned it.
However, according to our information, Otéra circulated internally an organization chart which fixed it at 1.25% of the value of the shopping center.
Also, the real estate complex was valued at just over $25 million in 2018 by the city of Terrebonne. On this basis, the market value of Paul Chin’s stake would therefore have been equivalent to just over $300,000.
1 “IMMEDIATE ACTION” The missive was sent on February 26, 2019 by Annie Giraudou, Senior Vice President and Chief Financial Officer, and Marianne Limoges, Senior Director, Risks, Portfolio and New Markets at Otéra.
It was about twenty days after the first revelations of our Investigation Bureau concerning ethics at the Caisse and the launch of an external investigation entrusted to a law firm.
2 The leaders who sign the email mention five real estate projects to which Paul Chin is directly or indirectly linked, including the Center Lachenaie, in which he has a direct financial participation.
These five projects are all linked to two divisions of the Westmount firm Delart Investments, either Brookline Developments (involved in Center Lachenaie) and Harbor Mortgage Corp.
3 “For all entities and individuals on the attached corporate chart, please make sure to exclude Paul Chin from any conversations and decisions”ask the two leaders to a skewer of Otéra managers.
4 An action plan in English is shared.
This plan provides, among other things, that Paul Chin will divest of all his interests related to the companies in question “within three months”. Until then, he is prohibited from getting involved in loans linked to firms with which he holds interests.
5 “ Since he [M. Chin] is at the highest level of investments, all decisions [en lien avec ses intérêts] will go to the credit committee of the board of directors”, provides for this plan.
We also promise to create automatic controls so that Mr. Chin cannot intervene in files related to his personal interests.
Photo archives, QMI Agency
“In terms of ethics, my level of tolerance is zero. Final point. »
Here is what Michael Sabia said bluntly during his famous press conference after our revelations about breaches of ethics at Otéra.
Saying he was “shocked”, he insisted on the importance of the level of confidence of Quebecers in this public institution which manages their woolen stocking of more than $400 billion.
“We are responsible for the savings of Quebecers. They have the right to expect the highest ethical standards from us. » –Michael Sabia, May 28, 2019
“Every day when I arrive at the Caisse, I have in my mind the question of the importance of our integrity. It is essential that Quebecers have confidence in the Caisse. In their box. »
We have asked the Caisse, over the past few weeks, if Mr. Sabia and current CEO Charles Émond were aware of the 2019 discoveries concerning Paul Chin. The Caisse did not respond specifically to this question.
The written statement she sent us indicates in a much broader way that “many changes have taken place at Otéra Capital since 2019. The mechanisms for supervising and managing conflicts of interest, like the code of ethics, have been greatly enhanced and deepened”.
But on March 16, the Auditor General scolded Otéra, pointing out that there were still shortcomings in terms of ethics.
According to her, there have been delays in the production of declarations of interest for employees and directors. Also, the new code of ethics is not always well applied, according to the auditor.
Recall that in 2019, the Caisse announced that it had fired four people after its internal investigation, without naming them.
We know today that these people are the ex-CEO of Otéra Alfonso Graceffa, the ex-vice-president Martine Gaudreault, the ex-director of economic research Edmondo Marandola, and the ex-administrator Yvon Tessier. .
Our Bureau of Investigation had notably revealed in the previous months that Graceffa had benefited from 11 loans worth more than $9 million from a subsidiary of Otéra. We had also mentioned M’s business and heart ties.me Gaudreault with a private mob-linked lender.
As for Edmondo Marandola, we highlighted his parallel activities as a real estate developer, and the fact that he had represented a senior mafia officer in a private loan, even though he was employed by Otéra.
Moreover, the Caisse is not yet out of the woods in this case, because Alfonso Graceffa is suing it for more than $7 million, alleging wrongful dismissal.
Reference-www.tvanouvelles.ca