Christine Lagarde found guilty of negligence — yet another scandal for an IMF leader
In yet another scandal at the International Monetary Fund, a French court on Monday found IMF chief Christine Lagarde guilty of negligence. Lagarde, who was absent for the verdict, will not face a jail term, but she becomes the agency’s third consecutive leader to be embroiled in scandal. According to The Independent, an IMF spokesperson confirmed that its executive board would meet soon “to consider the most recent developments.”
The charges center around Lagarde’s former role as French finance minister. In 2007, she settled a dispute between Bernard Tapie, a former shareholder of Adidas, and Crédit Lyonnais when Tapie accused the bank of shortchanging him when it managed the sale of his sportswear company. Tapie was eventually awarded a whopping $429 million in a controversial decision by an arbitration panel overseen by Lagarde.
Lagarde presided over the case because Crédit Lyonnais was partly state-owned at the time of Tapie’s claim. Lagarde’s decision to use a private arbitration committee instead of the French court system angered her critics. The outcry only grew louder when – despite the enormous sum awarded to Tapie – Lagarde choose not appeal the decision.
Bruno Bézard, former director of the French Treasury, told The New York Times he was shocked Lagarde hadn’t challenged the panel’s decision: “Given that the amount was so scandalous, even if we had one chance in 1,000 to win, it should have been done.”
Tapie was a close friend of then-President Nicolas Sarkozy. Investigators on the case have worked for many years to try to prove that Lagarde took the unusual step of arbitration because of Tapie’s close connection to the president and other members of the French political elite.
The charge against Lagarde carries a sentence of up to one year in prison and a $15,600 fine, but she has been told that, despite the conviction, she faces no fine or jail time. Neither will she receive a criminal record.
Lagarde took over after the previous head of the IMF was forced to step down amid controversy: Dominique Strauss-Kahn resigned in 2011 to fight sexual assault charges in New York. And his predecessor, Rodrigo Rato, is currently on trial in Spain, where he is accused of credit card fraud.
Lagarde, 60, protested throughout the trial that she “had acted in good faith.” Her legal team has said they will look into the appeals process.
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