Kurzweil
JF-Expert Member
- May 25, 2011
- 6,622
- 8,397
IMF head accused of negligence over €405m payout when French finance minister
The affair has hung over Ms Lagarde since she moved from the French finance ministry to become managing director of the International Monetary Fund in 2011. Despite the longstanding dispute, the fund’s executive board reappointed her in February to a second term that officially started on July 5. But a conviction would jeopardise her position at the helm of the Washington-based institution.
“She is confident that she will be exonerated but having this Damocles Sword hanging over her is a real nuisance,” a person in her Parisian circle of friends said.
Ms Lagarde will face a special tribunal for her decision to back an out-of-court settlement with Bernard Tapie, a supporter of then-president Nicolas Sarkozy. She is accused of negligence in public office in relation to the misuse of public funds, an offence that carries a maximum sentence of one year in prison and a fine of up to €15,000.
Ms Lagarde has consistently portrayed allegations against her as politically motivated and has told the IMF board that she should eventually be exonerated. Some at the IMF have privately linked the case to efforts to counter Mr Sarkozy’s political comeback. They now argue that his unceremonious departure from the centre-right field of presidential candidates in a primary last month plays in her favour.
Ms Lagarde, 60, who will attend the trial, has for years denied wrongdoing in the affair that has entangled several members of Mr Sarkozy’s cabinet. The case will be heard by the special tribunal set up to try ministers, comprised of six judges and 24 MPs.
The trial, which is scheduled to last until December 20, is the latest twist in a long-running saga that centres on €405m in compensation paid to Mr Tapie by the French government in 2008 after he claimed he was defrauded by Crédit Lyonnais, the defunct state-owned bank. Mr Tapie contended that the bank encouraged him to sell his stake in Adidas, the sports equipment company, for less than it was worth in 1993.
The state had initially fought the compensation claim but changed tack shortly after Mr Sarkozy was elected president, agreeing to settle the case through arbitration. Critics said the payout, backed by Ms Lagarde, was rigged to reward Mr Tapie, a former Socialist, for backing Mr Sarkozy’s election campaign.
A Paris court annulled the arbitration on the grounds that it was fraudulent and ordered Mr Tapie to repay the state. He is still facing possible criminal charges for fraud.
Ms Lagarde, a former lawyer, has disputed the notion of “negligence”. She has argued that she approved, against internal technocrats’ recommendation, of bringing the case into one single arbitration instead of nine pending cases because those cases “were bleeding the taxpayers in legal fees to the tune of €32m a year,” according to people briefed by her.
Ms Lagarde’s lawyers will on Monday request the trial to be rescheduled because suspects who allegedly committed the actual fraud in the case are still being investigated. They will argue that for any negligence leading to embezzlement to have occurred, those suspects first need to be proven guilty.
The IMF has reiterated its support for its chief. “The board has expressed its confidence in Madame Lagarde’s . . . ability to effectively carry out her duties and that remains the case today,” it said.
Source: Financial Times
The affair has hung over Ms Lagarde since she moved from the French finance ministry to become managing director of the International Monetary Fund in 2011. Despite the longstanding dispute, the fund’s executive board reappointed her in February to a second term that officially started on July 5. But a conviction would jeopardise her position at the helm of the Washington-based institution.
“She is confident that she will be exonerated but having this Damocles Sword hanging over her is a real nuisance,” a person in her Parisian circle of friends said.
Ms Lagarde will face a special tribunal for her decision to back an out-of-court settlement with Bernard Tapie, a supporter of then-president Nicolas Sarkozy. She is accused of negligence in public office in relation to the misuse of public funds, an offence that carries a maximum sentence of one year in prison and a fine of up to €15,000.
Ms Lagarde has consistently portrayed allegations against her as politically motivated and has told the IMF board that she should eventually be exonerated. Some at the IMF have privately linked the case to efforts to counter Mr Sarkozy’s political comeback. They now argue that his unceremonious departure from the centre-right field of presidential candidates in a primary last month plays in her favour.
Ms Lagarde, 60, who will attend the trial, has for years denied wrongdoing in the affair that has entangled several members of Mr Sarkozy’s cabinet. The case will be heard by the special tribunal set up to try ministers, comprised of six judges and 24 MPs.
The trial, which is scheduled to last until December 20, is the latest twist in a long-running saga that centres on €405m in compensation paid to Mr Tapie by the French government in 2008 after he claimed he was defrauded by Crédit Lyonnais, the defunct state-owned bank. Mr Tapie contended that the bank encouraged him to sell his stake in Adidas, the sports equipment company, for less than it was worth in 1993.
The state had initially fought the compensation claim but changed tack shortly after Mr Sarkozy was elected president, agreeing to settle the case through arbitration. Critics said the payout, backed by Ms Lagarde, was rigged to reward Mr Tapie, a former Socialist, for backing Mr Sarkozy’s election campaign.
A Paris court annulled the arbitration on the grounds that it was fraudulent and ordered Mr Tapie to repay the state. He is still facing possible criminal charges for fraud.
Ms Lagarde, a former lawyer, has disputed the notion of “negligence”. She has argued that she approved, against internal technocrats’ recommendation, of bringing the case into one single arbitration instead of nine pending cases because those cases “were bleeding the taxpayers in legal fees to the tune of €32m a year,” according to people briefed by her.
Ms Lagarde’s lawyers will on Monday request the trial to be rescheduled because suspects who allegedly committed the actual fraud in the case are still being investigated. They will argue that for any negligence leading to embezzlement to have occurred, those suspects first need to be proven guilty.
The IMF has reiterated its support for its chief. “The board has expressed its confidence in Madame Lagarde’s . . . ability to effectively carry out her duties and that remains the case today,” it said.
Source: Financial Times
