IMF boss guilty over huge payout
Court finds Lagarde negligent, but she escapes being sent to prison
AFRENCH court found IMF head Christine Lagarde guilty of negligence yesterday over a massive state payout to a tycoon when she was French finance minister.
But the court spared her a fine or prison sentence.
The ruling was a rare setback in Lagarde’s glittering career, but it was not clear how it would affect her position at the International Monetary Fund.
Its board is to meet urgently in Washington to discuss the court’s decision.
A special court in Paris found against Lagarde over her handling of a dispute between the state and flamboyant businessman Bernard Tapie, which ended in a ß404-million (R5.9-billion) award for Tapie.
The court rapped Lagarde for failing to contest the massive payment, which was linked to Tapie’s sale of the Adidas sportswear brand to Credit Lyonnaise Bank. Crucially, however, the court exempted her from any penalty, citing her international reputation and the fact that at the time of the events in 2008 she had been busy fighting a global financial inferno.
The high-flying former corporate lawyer became the first woman IMF chief in 2011, succeeding her disgraced compatriot, Dominique Strauss-Kahn.
She was not in the Paris court for the ruling.
Her lawyer, Patrick Maisonneuve, said she was in Washington for professional reasons.
He welcomed the absence of a sentence but said he would have preferred that she be cleared outright.
The French government expressed continued support for Lagarde, saying it retained its utmost confidence in her.
Lagarde, 60, was tried over her decision to allow the longrunning dispute over Tapie’s sale of Adidas to be resolved by a private arbitration panel instead of by the courts.
The court cleared her of negligence over that decision but upheld the charge over her failure to contest the staggering amount of the resulting award.
An investigation later showed the arbitration to be fraudulent.
Tapie, who was later ordered to pay back the money, is among six people charged with fraud in a separate criminal case, along with the boss of Orange telecoms company, Stephane Richard, a former aide to Lagarde.
Lagarde’s case was heard by the Court of Justice of the Republic – a tribunal of judges and MPs that hears cases against ministers accused of wrongdoing in office.
The punishment for negligence theoretically carried a one-year prison sentence and a ß15 000 (R220 000) fine.
Lagarde told the court during her five-day trial last week she had acted in good faith.
“My sole aim was to defend the general interest,” she said.
The court noted, however, that her inaction allowed Tapie and his wife to pocket ß45-million (R660-million) in moral damages for alleged emotional harm.
The trial landed the IMF back in the headlines for alleged wrongdoing by its bosses, five years after Lagarde was chosen to succeed Strauss-Kahn when he resigned to fight sexual assault charges. – AFP