The Court of Auditors has reported several malfunctions within the “Caisse des Dépôts et Consignations” (CDC), supposedly the financial arm of the state.
According to the recently released report of the Court (2019), these include conflicts of interest and non-compliance with the rules and ratios of prudential management, observed in a structure managing public and private funds, for investment in strategic sectors.
Indeed, the CDC is responsible for investing or participating in investments, directly or indirectly and within the framework of public or private partnerships, in all strategic economic sectors. These include infrastructure, regional development, new technologies, environment and sustainable development in addition to support for SMEs.
Eight investment contracts and conflicts of interest
In its report, the Court of Auditors noted a "lack of good governance in cases of conflict of interest, which led to the signing of 8 contracts, for investment operations amounting to 82 million dinars (MD), with companies with links to a member of the CDC control committee".
The CDC did not mention whether this member had informed the committee of his links with the companies, before taking decisions concerning them.
This same member had resigned from the body on July 4, 2016, the report of the Court of Auditors states.
In spite of his resignation, the same person was present at the committee meetings to approve financing files related to companies with which he had links. The minutes of these meetings do not mention whether this same person had voted or not the decisions to approve the financing.
According to the Court of Auditors, the decision of the Minister of the Economy and Finance, which defines the parties under CDC's responsibility and how to deal with cases of conflict of interest, does not specify how the Managing Director of CDC is to be informed of such cases and how decisions are to be made in their regard.
For example, Article 200 of the Commercial Companies Code stipulates that managers of a public limited company must ensure that there is no conflict between their personal interests and those of the company and that the terms of the transactions they enter into with the company they manage are fair.
They must declare in writing any direct or indirect interest they have in contracts or transactions concluded with the company or request that it be mentioned in the minutes of the executive board.
Non-compliance with prudential management rules
The Court of Auditors also reported non-compliance with prudential management rules and ratios. It mentions the approval by the CDC of 8 investment operations worth 56 MD, in proportions ranging from 23% (Sidi Thabet Technopark) and 100% (Project of the Tunisian Water Equipment Company) while the Fund’s commitments must not exceed 20% of the overall value of the investment, with the possibility of increasing this participation to 40%.
CDC's commitments in 5 investments amounting to 74 MD exceeded this rate by 40%, reaching 49% and 100%.
According to the Court of Auditors, this management is contradictory with the rules and ratios of prudential management and CDC has therefore "violated the principle of participation as a small investor whose mission is to attract private investors".
The CDC has also violated article 5 of the Decree of the Minister of Economy and Finance of February 3, 2015, setting the rules and standards of prudential management applicable to the “Caisse des Dépôts et des Consignations”.
This article stipulates that the risks incurred on a single beneficiary must not exceed 25% of the sum of net equity and permanent funds of the CDC.
However, the ceiling of the risk incurred on a single beneficiary of the CDC reached in 2016 around 243 MD, an amount very close to its equity estimated at 256 MD.
The “Caisse des Dépôts et Consignations” (CDC) was only able to materialise 2% of public interest investments for the period 2012/2016, against forecasts of a 14% achievement rate, revealed the 31st report of the Court of Auditors.