Sun Sentinel Palm Beach Edition
Lagarde stays IMF head despite guilty verdict
“She is a strong leader,” U.S. Treasury Secretary Jacob Lew said in a statement after the board’s decision. “And we have every confidence in her ability to guide the fund at a critical time for the global economy.”
The Court of Justice of the Republic is a special tribunal to hear cases of alleged criminality by ministers in office and is made up, unusually, of three judges and 12 parliamentarians. It ruled that Lagarde’s negligence in her management of a longrunning arbitration case involving tycoon Bernard Tapie helped open the door for the fraudulent misappropriation of public funds. Lagarde herself was not accused of fraud.
The case revolves around a $425 million arbitration award given to Tapie in 2008 over the botched sale of sportswear giant Adidas in the 1990s. Civil courts have since quashed the unusually generous award, declared the arbitration process and deal fraudulent and ordered Tapie to refund the money.
The special court’s presiding judge, in reading the verdict, said Lagarde should have asked her aides and others for more information about the “shocking arbitration award,” which included a tax-free payment of $47 million in damages to Tapie, which the court described as fraudulent.
Had Lagarde contested the award, an appeal against it might have succeeded and would have strengthened the negotiating position of those who were fighting Tapie’s demands for compensation over the sale of his majority stake in Adidas, the court ruled.
In deciding not to sentence Lagarde, the court noted that the award to Tapie has since been annulled, sparing damage to the public purse. It also noted that Lagarde was busy at the time with the global economic crisis.
Lagarde’s “personality and national and international reputation” also counted in her favor in the decision not to punish her, the court ruled.
Lagarde, who was not present for the verdict, maintained her innocence through the trial. The prosecutor had asked for an acquittal in the case, which began in 2011.
The special court acquitted Lagarde of negligence in her original decision to put the Tapie case to arbitration. But it found her guilty in a subsequent decision not to contest the amount of the arbitration award.