Three former CDPQ infrastructure executives, whose departures from the Canadian pension fund were revealed by Infrastructure Investor in January, have had charges brought against them by US authorities in an alleged case of bribery.
The charges concern former executives Cyril Cabanes, Deepak Malhotra and Saurabh Agarwal for their participation in an alleged bribery scheme involving Indian conglomerate Adani Group alongside renewables firm Azure Power.
CDPQ is Azure Power’s largest shareholder, owning just over 50 percent, while compatriot OMERS Infrastructure also owns about 19 percent. Adani Green Energy, majority-owned by the Adani Group, was another alleged beneficiary of the scheme.
Cabanes was CDPQ’s long-serving managing director of infrastructure for the Asia-Pacific and Middle East. Agarwal was managing director of CDPQ India and managing director, infrastructure for South Asia, while Malhotra was a director, infrastructure for South Asia. The reason for their exits were not known when reported on in January.
Asked to comment on the charges against three of its former executives, a spokesperson for CDPQ told Infrastructure Investor: “CDPQ is aware of charges filed in the US against certain former employees. Those employees were all terminated in 2023 and CDPQ is co-operating with US authorities. In light of the pending cases, we have no further comment at this time.”
The criminal charges filed on 24 October and unsealed Wednesday by the US Attorney’s Office for the Eastern District of New York allege that, in 2021-22, the three former CDPQ executives “knowingly and willfully joined the conspiracy” started in 2020 by senior members of the Adani Group – including Gautam Adani, the billionaire chair of the Indian conglomerate – to “corruptly offer, authorise, promise to pay and pay bribes”.
Further, they also “agreed knowingly and corruptly to conceal the scheme from the United States government” including by obstructing an investigation by a grand jury, the FBI, the Justice Department and the Securities and Exchange Commission.
According to the SEC – which has brought its own charges, albeit only against Cabanes, Gautam Adani and his nephew, Sagar Adani, the executive director of Adani Green’s Board – the bribery scheme involved paying or promising to pay the equivalent of hundreds of millions of dollars in bribes to Indian government officials to secure their commitment to purchase energy at above-market rates that would benefit Azure Power, as well as Adani Green Energy.
At the time, Adani Green Energy raised $175 million from US investors, while the bribery scheme was in progress.
“As alleged, Gautam and Sagar Adani induced US investors to buy Adani Green Energy bonds through an offering process that misrepresented not only that Adani Green Energy had a robust anti-bribery compliance programme but also that the company’s senior management had not and would not pay or promise to pay bribes, and Cyril Cabanes participated in the underlying bribery scheme while serving as director of a US public company,” said Sanjay Wadhwa, acting director of the SEC’s Division of Enforcement.
The SEC’s complaint against the three seeks permanent injunctions, civil penalties, and officer and director bars.
Cabanes joined the Canadian pension in March 2016 and left in October 2023. In July, he became chief executive officer of Trafigura-owned MorGen Energy, a European green hydrogen company. Asked to comment, Trafigura told Infrastructure Investor through a spokesperson that: “Trafigura and MorGen became aware of the charges against Mr Cabanes when the US authorities made a public announcement overnight. It has been agreed with Mr Cabanes that he will step back from his day-to-day responsibilities while we review the matter. Neither MorGen Energy nor any Trafigura Group company is a party to these proceedings.”
Cabanes did not respond to a request for comment.
Malhotra joined CDPQ in 2018 and also left at the end of October 2023. Both he and Cabanes had served on Azure Power’s board, resigning on 1 November 2023. Agarwal was not an Azure Power board member. He left the Canadian pension in August of last year. They could not be reached for comment in time for publication.
In a statement provided to the media, the Adani Group rejected the charges: “The allegations made by the US Department of Justice and the US Securities and Exchange Commission against directors of Adani Green Energy are baseless and denied,” adding that “all possible legal recourse will be sought”.
12GW of contracts
CDPQ initially invested $140 million in Azure Power in September 2016, taking a 21 percent stake in the company, before it went public. A further $100 million was invested in October 2018, lifting its stake to 40 percent. CDPQ became a 49.4 percent shareholder in November 2019 when it injected a further $75 million, before becoming the majority 50.9 percent shareholder in March 2020.
The issue centres on contracts for a total of 12GW of solar power to be developed in India. Azure Power was contracted to deliver 4GW of PV to the Solar Energy Corporation of India (SECI) – owned by the Indian federal government – while Adani Green had contracts for 8GW. These contracts were awarded in 2020 and SECI was responsible for finding offtakers among state electricity distribution companies.
It is alleged that when it became clear that state-owned utilities were unwilling to pay above-market rates for power, bribes to the tune of “hundreds of millions of dollars” were paid, or promised to be paid to Indian government officials to ensure that PPAs could be signed with SECI and hence allow Azure Power and Adani Green Energy to develop the projects and profit, according to the SEC.
For its part, Azure Power said in a statement: “[Azure Power] is aware of the actions announced by the US Department of Justice and US Securities and Exchange Commission against certain former directors and officers of Azure, as well as certain third parties. As Azure initially disclosed in January 2023 and in subsequent filings and annual reports, it has co-operated with those agencies and it will continue to do so. The former directors and officers of Azure referenced in the US Department of Justice and US Securities and Exchange Commission actions ceased to be associated with Azure more than a year ago. Azure is not a defendant in either action and will not be commenting further at this time.”
Bruno Alves, Kalliope Gourntis and Zak Bentley also contributed to this report