The Caisse de dépôt et placement du Québec.
Ryan Remiorz / THE CANADIAN PRESS
The Caisse de dépôt et placement du Québec removed the head of its Otéra Capital real-estate lending unit and said it will overhaul governance standards at the business after an external investigation identified “serious” ethical breaches linked to personal activities.Rana Ghorayeb was named president and chief executive officer of Otéra, effective immediately, the Caisse said Tuesday in a statement. She replaces Alfonso Graceffa, who is no longer employed by the Caisse.Graceffa had already relinquished all of his functions in February.The investigation was launched in February after the Journal de Montréal reported that Alain Cormier, the longtime romantic partner of Otéra vice-president Martine Gaudreault, had done business with alleged members of the Montreal Mafia and people linked to organized crime. Gaudreault no longer works for Otéra, the Caisse said Tuesday.Graceffa’s own actions have also come under scrutiny. According to the Journal, companies owned by the former CEO received millions of dollars in loans over the years from a subsidiary of Otéra to finance various properties.Otéra’s portfolio was not subjected to fraud or embezzlement, according to the conclusions of the audit, which was produced by a team of Montreal-based lawyers at the Osler law firm. The investigators found no proof of “fraudulent transactions,” Osler partner Stéphane Eljarrat said in a five-page summary of the report that was provided to journalists.“The question was whether organized crime infiltrated Otéra, and the answer is no,” Eljarrat told reporters at a press conference in Montreal Tuesday.Even so, the probe found that four Otéra employees violated the unit’s code of ethics — for instance, by placing themselves in positions of conflict of interest, by not declaring their holdings in various companies or by informing an unidentified third party about matters involving Otéra. The four individuals no longer hold functions at the Caisse. None of them acted in concert, Eljarrat said.One of the people, whom the Osler report did not name, frequently used their work email address to conduct personal transactions for “substantial” sums — such as a $180,000 personal loan. Some of the dealings involved “a person that has, or has had, direct or indirect links with known organized crime actors,” the report said.“While the Otéra portfolio has retained its integrity, there were ethical lapses,’’ Caisse CEO Michael Sabia told reporters. “To put it mildly, I am extremely unhappy. This is unacceptable. The goal now is to correct the situation and improve the processes at Otéra. We’re going to do this quickly because this is serious business.”Investigators are in contact with police authorities regarding some of their findings, Eljarrat said, declining to elaborate. Sabia wouldn’t say whether the Caisse would sue any of the former Otéra employees.Otéra oversaw about $13.6 billion as of the end of last year. This compares with $309.5 billion for the Caisse as a whole.As a result of the investigation, the Caisse has decided to revamp Otéra’s board of directors and to split the titles of chairman and CEO. Claude Bergeron, head of risk management at the Caisse, will become Otéra’s chairman.A new code of ethics will be implemented at the unit, and the position of chief compliance officer will be created.About 120 people worked on the investigation, which required poring over “hundreds of thousands” of documents, Eljarrat said. The work cost about $5 million, Sabia said.Quebec Finance Minister Eric Girard, who is responsible for the Caisse, said he was satisfied with the report.“What’s important is that we have an exhaustive report and that the integrity of Otéra’s portfolio is confirmed,” Girard told reporters Tuesday in Quebec City. The investigation “covered all the bases,” he said.Ghorayeb was previously a senior vice-president for infrastructure at the Caisse. Earlier she ran Aquilae Capital, a real estate consulting firm.Philip Authier of the Montreal Gazette contributed to this report.Related