LA CAISSE DE DEPOT ET PLACEMENT DU QUEBEC POLITICAL AND MANAGERIAL ERRORS
Open Access
- Author:
- St-Maurice, Guillaume
- Area of Honors:
- Accounting
- Degree:
- Bachelor of Science
- Document Type:
- Thesis
- Thesis Supervisors:
- Henock Louis, Thesis Supervisor
Henock Louis, Thesis Supervisor
Orie Edwin Barron, Thesis Honors Advisor - Keywords:
- La Caisse de Depot et Placement du Quebec
- Abstract:
- La Caisse de Depot et Placement du Quebec represents the largest institutional fund manager in Canada. It manages public pension plans in the province of Quebec. In 2002, the fund welcomed Henri-Paul Rousseau, former president of the Canadian Laurentian Bank and prominent public figure, as its new president. Under his administration, the institution changed many objectives and shifted away from its original purpose, which was to provide a reasonable return on investment for the population’s future retirement money while acting as a financial instrument to help the economy of Quebec. Rousseau quickly implemented a strategy based on short-term returns and gambled on the interest levels. Furthermore, the fund adopted aggressive strategies based on complex models and made its most important mistake in the accumulation of asset-backed commercial papers. The new structure adopted by Rousseau was fundamentally wrong for a fund like La Caisse de Depot et Placement du Quebec and resulted in a 25% loss in total net assets for the year 2008, which was far worse than the performance of the other major Canadian pension funds. My analysis suggests that the poor performance of La Caisse de Depot was not due only to the recent financial crisis or bad luck. Apparently, Henri-Paul Rousseau’s personality and management style also contributed to the poor performance. His overconfidence and quest for fame pushed the institution towards the short-term investment market where La Caisse de Depot lost a total of 4 billion dollars on the asset-backed commercial paper scandal. A lack of regulations and support from the government in place enabled Rousseau to control every move inside the institution.