Former Otéra CEO Sues CDPQ After Being Fired for ‘Ethical Failings’

Alfonso Graceffa, the former CEO of Otéra Capital, the real estate lending arm of C$309.5 billion ($234.7 billion) Canadian pension fund Caisse de depot et placement du Québec (CDPQ), is suing CDPQ after being fired following an external investigation that found he had committed “serious ethical failings.”

Graceffa is suing for more than C$7.35 million, saying CDPQ unjustly fired him and ruined his reputation, adding that it is virtually impossible for him to continue to work in real estate, according to the Montreal Gazette, which obtained a copy of the lawsuit.

CDPQ launched its investigation in February after the Journal de Montréal reported that Alain Cormier, a romantic partner of Otéra vice president Martine Gaudreault, had conducted business with the Montreal Mafia and people linked to organized crime. Gaudreault no longer works for Otéra, according to CDPQ.

Until May 27, Graceffa served as CEO and president of the board of directors of Otéra Capital, president of the board of directors of mortgage financing company MCAP, and head of business units and member of the executive committee of Ivanhoé Cambridge, a CDPQ-owned real estate firm. In his positions, Graceffa was responsible for more than $100 billion worth of funds and assets under management. Graceffa was replaced by Rana Ghorayeb, who was named president and CEO of the company.

Graceffa has accused CDPQ of carrying out a “negative public relations exercise” against him, and cited the fact that the fund’s investigation into him found no evidence that the Otéra portfolio was subject to fraud or to money laundering, and no evidence of fraudulent transactions.

“I have never in my career received any preferential treatment or benefit. And I have never provided anyone else with such benefits,” said Graceffa in a statement. “The allegations against me are based on incomplete facts that have been taken out of context. They constitute an unacceptable and unjustified attack on my reputation.”

However, CDPQ stood by its decision and said it will “vigorously defend” its firing of Graceffa, saying the dismissal came after the investigation found “serious” ethical breaches linked to personal activities, despite finding no evidence that Otéra’s portfolio had been subject to fraud or malfeasance. The fund did not specify what that personal activities were, but said it would bring them to light in a trial if necessary. 

“The serious ethical failings identified in the investigation report in no way correspond to the high standards that Quebecois are entitled to expect from a CEO of a subsidiary of a public institution,” said CDPQ in a release. “The Caisse and its subsidiaries will not pay any pennies for the savings of Quebecois to someone who has broken the bond of trust through serious ethical failings.”

The pension fund said that if Graceffa decides to proceed with his lawsuit, it is “prepared to give a detailed demonstration of our evidence and the facts leading to the dismissal for cause in court.”  

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