IMF chief La­garde found guilty over ty­coon pay­out

Board meets to dis­cuss fall­out of guilty ver­dict against La­garde

Kuwait Times - - FRONT PAGE -

A French court yes­ter­day found IMF head Chris­tine La­garde guilty of neg­li­gence over a mas­sive state pay­out to a ty­coon when she was French fi­nance min­is­ter but spared her a fine or pri­son sen­tence. The Court of Jus­tice of the Repub­lic found against La­garde over her han­dling of a dis­pute be­tween the state and flam­boy­ant busi­ness­man Bernard Tapie, which ended in a 404-mil­lion-euro ($422 mil­lion) award for Tapie.

The IMF was ex­pected to meet shortly to dis­cuss the im­pli­ca­tions of the guilty ver­dict against IMF chief Chris­tine La­garde in a French court, a spokesman for the or­ga­ni­za­tion said yes­ter­day. “The Ex­ec­u­tive Board has met on pre­vi­ous oc­ca­sions to con­sider de­vel­op­ments re­lated to the le­gal pro­ceed­ings in France. It is ex­pected that the Board will meet again shortly to con­sider the most re­cent de­vel­op­ments,” fund spokesman Gerry Rice said in a state­ment. La­garde was put on trial over her 2007 de­ci­sion to al­low a dis­pute over sale of the Adi­das sports brand to the state-owned Credit Ly­on­nais bank to be re­solved by a pri­vate ar­bi­tra­tion panel, and then fail­ing to chal­lenge the re­sult. The court cleared her of neg­li­gence over her de­ci­sion to re­fer the mat­ter to ar­bi­tra­tion but up­held the charge over her fail­ure to con­test the award.

The first woman to head the IMF, La­garde presided over some of the worst of the fall­out from the 2008 fi­nan­cial cri­sis and is in her se­cond term as man­ag­ing di­rec­tor af­ter she was reap­pointed in Fe­bru­ary. If the board de­cides she must leave, it will cre­ate a race to search for a re­place­ment, who ac­cord­ing to an agree­ment should come from a de­vel­op­ing na­tion.

In a blow to her other­wise stel­lar ca­reer, the court rapped La­garde for fail­ing to con­test the mas­sive pay­ment. Cru­cially, how­ever, the Paris court said ex­empted her from any penalty. It was not clear what im­pact the find­ing will have on her po­si­tion at the In­ter­na­tional Mon­e­tary Fund, which has so far given La­garde its full back­ing. The IMF board was to meet in Wash­ing­ton in the wake of the court’s de­ci­sion. The 60-year-old for­mer cor­po­rate lawyer, who was the first ever fe­male fi­nance min­is­ter of a Group of Eight coun­try be­fore be­com­ing IMF chief in 2011, was not in court for the rul­ing. Her lawyer Pa­trick Maison­neuve told re­porters she was in Wash­ing­ton. Maison­neuve wel­comed the ab­sence of a pun­ish­ment but said he “would have pre­ferred that she be sim­ply cleared”. La­garde was put on trial over her 2007 de­ci­sion to al­low the dis­pute over Tapie’s sale of the Adi­das sports brand to the state-owned Credit Ly­on­nais bank to be re­solved by a pri­vate ar­bi­tra­tion panel, and then fail­ing to chal­lenge the re­sult. The court cleared her of neg­li­gence over her de­ci­sion to re­fer the mat­ter to ar­bi­tra­tion but up­held the charge over her fail­ure to con­test the award.

La­garde told the court last week she had acted in good faith and that her sole aim had been “to de­fend the gen­eral in­ter­est”. The Court of Jus­tice of the Repub­lic, which is staffed by judges and mem­bers of par­lia­ment, hears cases against min­is­ters ac­cused of wrong­do­ing in of­fice. The pun­ish­ment for neg­li­gence the­o­ret­i­cally car­ries a one-year pri­son sen­tence and a 15,000-euro fine.

Strain on fam­ily

La­garde’s voice cracked with emo­tion on Fri­day as she said the trial had put her fam­ily she is the mother of two sons-through a “test­ing” time. Prose­cu­tor Jean-Claude Marin had said he be­lieved the ev­i­dence was “very weak” and was op­posed to con­vict­ing La­garde. The pay­out to Tapie raised eye­brows, given his vo­cal sup­port for La­garde’s then boss, ex-pres­i­dent Ni­co­las Sarkozy.

It was sub­se­quently can­celled by the courts. Tapie sold Adi­das to Credit Ly­on­nais for the equiv­a­lent of 315.5 mil­lion euros in 1993. The bank sold it on the following year for 701 mil­lion euros, prompt­ing claims from Tapie that he had been cheated.

La­garde told her trial she had trusted the ad­vice of her sub­or­di­nates in the process. An­other of her lawyers, Bernard Grelon, said her fault was “not one of neg­li­gence. It is hav­ing taken a de­ci­sion which turned out badly”. As IMF chief, La­garde has been a key player in bailout ne­go­ti­a­tions for Greece and has also worked to re­form the US- and Europe-dom­i­nated in­sti­tu­tion to re­flect China’s grow­ing global lever­age.

La­garde suc­ceeded her dis­graced com­pa­triot Do­minique Strauss-Kahn as IMF man­ag­ing di­rec­tor af­ter he re­signed to fight sex­ual as­sault charges.

An­other for­mer IMF head, Ro­drigo Rato of Spain, is cur­rently stand­ing trial on charges of mis­us­ing funds when he was head of Span­ish lender Bankia.

There is a long­stand­ing agree­ment among the ad­vanced economies af­ter World War II that the head of the IMF is al­ways a Euro­pean five of the 11 have been from France-while the leader of the World Bank is al­ways an Amer­i­can.

How­ever, in the early 2000s there was a move to in­crease rep­re­sen­ta­tion in the so­called Bret­ton Woods in­sti­tu­tions, es­pe­cially the IMF, to give less weight to small Euro­pean economies, and to se­lect a leader from among the large emerg­ing mar­ket economies like Mex­ico and the so-called BRICs coun­tries Brazil, Rus­sia, In­dia and China. — AFP

— AFP

PARIS: Pa­trick Maison­neuve (cen­tre), lawyer of In­ter­na­tional Mon­e­tary Fund head Chris­tine La­garde (in­set), speaks to jour­nal­ists yes­ter­day at the Court of Jus­tice of the Repub­lic in Paris following the de­ci­sion in his client’s trial for neg­li­gence over a mas­sive state pay­out to a ty­coon when she was French fi­nance min­is­ter.

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