While Quebec’s Auditor General Guylaine LeClerc says the Caisse de Dépôt et Placement du Québec’s exposure to international and private markets is increasing fraud and corruption risks, the institutional investor is describing its strategy as “essential.”
“Diversification, both in terms of geography and asset classes, is essential to meet the return needs of our depositors over the long term and to be well positioned to withstand economic and market fluctuations,” wrote a press officer for the Caisse on behalf of the organization in an email to the Canadian Investment Review.
A recent report from LeClerc recommended the institutional investor, which manages $419.8 billion in assets, strengthen its risk detection policies and guidelines. “The prevention and detection framework must be strengthened against certain risks that could damage the reputation of the Caisse.”
The Caisse’s current fraud and corruption detection and prevention program consists of a governance framework, a risk identification process, as well as prevention and detection activities and investigation mechanisms. Among the areas of weakness highlighted, LeClerc noted a lack of structured guidelines to support professionals responsible for assessing and communicating reputational risks.
“Although the existing framework covers some aspects of money laundering, there are no policies or guidelines dedicated to this risk that cover all the relevant elements.”
While not mentioned in the report, the Caisse requires employees to complete regular training on issues related to fraud and corruption. It also provides a website and telephone number allowing employees to report breaches of ethics or law in confidence.
“This compliance review was an additional tool to validate the rigour of our oversight and risk management mechanisms, which [LeClerc] recognizes are in line with best practices,” wrote the Caisse’s press officer. “The [auditor general] also noted that our code of ethics is among the most rigourous. We always welcome opportunities to improve our processes and we are already implementing the elements that were identified for improvement.”