IMF’s Lagarde guilty of ‘negligence’ but avoids sentence over 2008 payout

Christine Lagarde

Christine Lagarde

A French court on Monday convicted International Monetary Fund chief Christine Lagarde of “negligence” for her role in a controversial €400 million payout to a French tycoon in 2008 while she was finance minister.

The Court of Justice did not hand down a sentence, a decision welcomed by her lawyer, Patrick Maisonneuve, as a “partial” victory.

“We wanted a complete acquittal, instead we got a partial one,” said Maisonneuve. “The court has decided not to penalise her – in fact, the court even decided this should not go on Madame Lagarde’s criminal record.”

Lagarde told reporters at IMF headquarters that she would not appeal the decision.

“I have been held negligent, but without penalty, without sanction, without registration of the decision,” she said. “I am not satisfied with it, but there’s a point in time when one has to just stop, turn the page and move on and continue to work with those who have put their trust in me.”

Lagarde, 60, was accused of approving a controversial €400 million ($425 million) payout to businessman Bernard Tapie in an out-of-court settlement when she was finance minister under former president Nicolas Sarkozy.

The chief prosecutor in the trial, Jean-Claude Marin, said Thursday after a hearing in Paris that the accusations against her for being negligent were “very weak”.

An arbitration panel ordered the payout to Tapie in connection with his sale of sportswear company Adidas. The panel upheld Tapie’s claim that the Crédit Lyonnais bank had defrauded him by intentionally undervaluing Adidas at the time of the sale and that the state – as the bank’s principal shareholder – should compensate him.

It was Lagarde who, in her role as French finance minister, ordered the case to be heard by an arbitration panel instead of proceeding through the regular courts.

Critics say that Lagarde ensured Tapie received preferential treatment by referring the matter to arbitration as a quid pro quo for his financial support for Sarkozy during his 2007 presidential bid.

They also argue that the state should not have paid compensation to a convicted criminal who was bankrupt at the time and would not have been able to pursue the case in court. Tapie spent six months in prison in 1997 for match-fixing during his time as president of popular French football club, Olympique Marseille.

Lagarde has always protested her innocence, denying any wrongdoing in the arbitration process, which she says was independent and in the best interests of taxpayers.

IMF issues vote of confidence

The executive board representing the IMF’s 189 member countries reaffirmed its full confidence in Lagarde’s ability to lead the crisis lender, hours after the verdict was issued.

But the conviction may still work against Lagarde in her campaign to push back against a wave of protectionist sentiment and populist mistrust of public officials. She has called on IMF member countries to better promote the benefits of trade and globalisation and adopt policies that combat growing inequality.

Media in France seized on the guilty-without-punishment verdict, voicing indignation in editorials Tuesday morning. In the left-leaning daily Libération, Laurent Joffrin wrote, “The ordinary person answerable to the law, less apt to be handled with kid gloves, will draw from this the notion that the ordinary fellow, who doesn’t enjoy an ‘international reputation’, to quote the decision, will not be able to benefit from similar indulgence.”

Similarly, in the regional newspaper Le Courrier Picard, Daniel Muraz opined, “This decision will be interpreted as new evidence of the impunity of a political caste that can do what it likes without fearing the consequences.”

In another French regional daily, La République des Pyrénées, Jean-Michel Bouguereau warned that the “indulgence” offered Lagarde would “opportunely nourish the anti-political sentiment that does not cease to rise in the country”.

Reappointed to a five-year term in February, Lagarde said on Monday that she would now “focus all my attention, all my time, all my efforts, all my energy and enthusiasm to my mission as head of the IMF”.

Tapie was placed under formal investigation for committing fraud in late June of 2013. He was ordered to pay back the money starting in December of last year.

The “Tapie affair” has entangled several other high-profile figures, including Sarkozy’s ex-chief of staff Claude Guéant and Stéphane Richard, Lagarde’s former chief of staff at the finance ministry and now chief executive of Orange.

Lagarde was appointed managing director of the IMF in July 2011. Lagarde served as French finance minister from June 2007 and also served as minister of foreign trade for two years. Before entering politics she worked as an anti-trust and labour lawyer, and was a partner with the international law firm of Baker & McKenzie.