Lagarde seen likely to avoid jail time, keep IMF job amid trial

WASHINGTON: Christine Lagarde is likely to avoid jail time and keep her job as head of the International Monetary Fund after she was ordered to stand trial in France on charges that carry a potential prison term.

Lagarde, 60, on Friday lost a bid to challenge a December decision to be tried for alleged negligence during her time as French finance minister that paved the way for a massive government payout to tycoon Bernard Tapie.

The specialised panel that will hear Lagarde’s case has previously found ministers guilty without having them actually serve time in prison.

The panel’s record and Lagarde’s strong support from IMF member nations amid the long-running case mean there’s little chance that it will amount to more than a distraction from her role leading the world’s lender of last resort. No date has been set yet for the trial, which is expected to last about a week.

“I don’t think anybody really feels that this is a matter that undermines her effectiveness,” and if Lagarde received a suspended jail sentence, “she would just carry on,” said Edwin Truman, a former US Treasury official who’s now a senior fellow at the Peterson Institute for International Economics in Washington.

The US continues to have a high regard for Lagarde, a US Treasury official told reporters in Chengdu, China, on Saturday, when asked about the court case. The IMF chief and Treasury Secretary Jacob J Lew are in Chengdu this weekend attending a Group of 20 gathering.

Lagarde is accused of failing to block an arbitration process in 2008 that brought to an end the longstanding dispute between former state-owned bank Credit Lyonnais and Tapie, a businessman and supporter of then — French president Nicolas Sarkozy. Tapie walked away with an initial award of about 285 million euros ($314 million) before it was cut to zero by an appeals court. Negligence Charge The charge of negligence in the use of public funds carries a maximum penalty of one year in prison and a fine of 15,000 euros. “I am convinced that the court will find the allegations of negligence to be without merit,” Lagarde’s lawyer Patrick Maisonneuve said.

While a jail sentence can’t be ruled out, it’s more likely that Lagarde would get a symbolic fine if convicted, said Christopher Mesnooh, a Paris-based lawyer at Fieldfisher LLP.

The Cour de Justice was created in 1993. It’s made up of three professional judges and 12 parliamentarians. Six ministers have stood trial before the court, including current Environment and Energy Minister Segolene Royal in a defamation case and Laurent Fabius in relation to the distribution of contaminated blood when he was prime minister. Both were cleared.

Edmond Herve, who was health minister, was convicted in the contaminatedblood case in 1999, though he was spared a prison term because 15 years had lapsed and because he wasn’t able to benefit entirely from the presumption of innocence during that time. Former Interior Minister Charles Pasqua received a suspended sentence in the embezzlement case in 2010.

French President Francois Hollande had pledged to abolish the Cour de Justice when he was running for the office but never managed to do it. Presidential and parliamentary elections in France scheduled for May and June, respectively, could also affect the timing of the trial.