Terminated loans to boss for ‘serious violations’ at Caisse de Depot et Placement du Quebec

The Caisse de Depot et Placement du Québec continues to do business with one of its former officials, even after firing him for “serious ethical violations.”

Our investigative office has found that the Caisse is still managing mortgages for Alfonso Graceffa, the former CEO of its commercial lending subsidiary Otéra Capital, who was fired in 2019.

Alfonso Graceffa

Archive photo

Alfonso Graceffa

Some of these loans were even extended in 2020, we learn from extracts from the land register.

This is despite Mr Graceffa’s $7.3 million lawsuit against the Caisse for alleged wrongful dismissal.

The funds granted to Alfonso Graceffa are managed by MCAP, a subsidiary of Otéra. To date, MCAP is listed as a creditor for more than $6.4 million for the buildings owned by Mr. Graceffa and his business partners, including:

– $3.3 million for a 45-unit rental building in Côte-Saint-Luc, on the island of Montreal.

– $3.1 million for an eight-story apartment complex in Pointe-Claire, also on the island of Montreal.

Alfonso Graceffa

Photo Jean Louis Fortin

Otéra acknowledges that these loans are actually managed by MCAP for a commission.

But in a written statement she sent us, she points out that MCAP does not lend money directly to the former CEO of Otéra and only acts as an intermediary between him and the banks.

Those loans “were approved and disbursed well before Mr. Graceffa’s departure in 2019,” explains Otéra Capital.

Then why did you sign loan extensions even after Mr. Graceffa was fired?

The company doesn’t respond directly, but says that “MCAP, as a credit servicer, is required to comply with the policies, procedures and contracts of the financial institution acting as the lender-investor for the loans it administers.”

In its response, Otéra Capital also refers to MCAP as “a separate company,” despite owning 78% of the assets according to its latest annual report.

In June 2019, the Caisse publicly stated that it would “not pay a dime of compensation out of Quebecers’ savings to anyone who has breached the relationship of trust through serious ethical violations”.

We wanted to know why Alfonso Graceffa always used the services of the Caisse for his real estate activities, even when he sued the institution.

“Out of respect for the ongoing court proceedings, Mr Graceffa is waiting for the court to rule on his case before making any public comments,” his spokesman Jean Maurice Duddin replied.

In the lawsuit against the Caisse, Alfonso Graceffa alleges that during the years that he was head of Otéra, the Caisse and MCAP were “fully aware” of the loans on his properties.

– With the collaboration of Philippe Langlois

Ex-CEO Michael Sabia called to testify

Former Caisse de Depot boss Michael Sabia will be questioned under oath in court if Alfonso Graceffa’s unfair dismissal lawsuit goes to court.

Mr Sabia, now Federal Deputy Minister of Finance, was Chairman of the Caisse when the ethical violations alleged by Mr Graceffa took place.

He is one of a dozen witnesses Mr. Graceffa plans to interview as part of his lawsuit filed in June 2019.

Otéra’s ex-boss claims to have been “sacrificed” by the Caisse, which was trying to “save its public and political image” at the time when it was the subject of ethics reports.

He is demanding more than $7.3 million because he believes that despite an impeccable track record, it will now be impossible for him to hold a job in finance and real estate again.

On May 20, Chief Justice of the Quebec Court Jacques R. Fournier set a 12-day trial for May 2023.

In addition to Michael Sabia, Alfonso Graceffa particularly wants to interview Daniel Fournier, ex-CEO of Ivanhoé Cambridge, who left the Caisse in October 2019.

In the latest version of its defence, the Caisse reiterates that it dismissed Mr Graceffa for “serious reasons” including “having met a person with a criminal record in his administrative office at Otéra” and “having one accepted by him”. Envelope with $15,000 in cash”.

For her part, she wants seven people to testify, including Salvatore Graceffa, Alfonso’s brother, who should have received the $15,000.

Quebeckers also criticize the former Otéra CEO for “approving or recommending loans from Otéra while in conflict or apparent conflict of interest,” including “approving at least fourteen loans benefiting friends.”

According to Caisse, Alfonso Graceffa also “used his position to discuss and negotiate the terms of mortgage financing for private real estate with the managers of an Otéra subsidiary”.

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