The alleged escapades of Dominique Strauss-Kahn (DSK) have raised a new pressing issue for the search for a new IMF chief. With the risk that someone will be appointed who may not be fully fit for the job.
Being the paymasters, the Europeans prefer to appoint a European to a high position. The most frequently mentioned candidate is the current French Finance Minister, Christine Lagarde. She can now count on the support of the European Commission and of most European capitals, including Rome, Berlin, London and The Hague. Her professional skills are unquestionable. However, if Lagarde becomes indeed the successor to Strauss-Kahn, a compatriot, she might be forced to leave the stage early as well, to report to the court.
Adidas
Earlier last week, the French attorney general asked the Court of the Republic (CJR), the only authority competent to prosecute incumbent ministers, to start an investigation into possible favouritism by Lagarde. The affair hanging like a sword of Damocles over her head is that of Bernard Tapie. It’s a complicated, lingering case that seems to be a French speciality. The beloved and flamboyant Tapie, nicknamed ‘Nanard’, has been a minister during Mitterrand’s presidency, president of the football club Olympique Marseille, a businessman, and an actor. He now earns his living as an internet entrepreneur. Tapie also owned sports brand Adidas, which he sold in 1993. Two years later, the businessman discovered he was a victim of a financial scam by the bank Crédit Lyonnais (now called LCL), which had handled the 1993 sale. He sues the bank, marking the beginning of a lengthy court case. In 2005, the Paris Court of Appeal ruled in favour of Tapie. In July 2008, following arbitration, Bernard Tapie was awarded 390 million euros, of which a staggering 45 million euros for ‘moral damage’, an exceptional amount in French jurisprudence. After deduction of his tax debts, Tapie was left with a net amount of 210 million euros, courtesy of the French taxpayer. According to the media, the interests of Tapie, also a friend of Nicolas Sarkozy, were protected too much, whereas the interests of the French State were neglected. Christine Lagarde, acting on Sarkozy’s instructions, was supervising the arbitrage. However, in 2008, Lagarde already denied being a ‘copine‘, a friend, of Tapie.
Smear Campaign
A confidential report by the Court of Audit, leaked through the website Mediapart, confirms that Lagarde has indeed been quite generous to Tapie. According to Lagarde herself, the investigation is part of a smear campaign. With the current knowledge, European leaders of government would be wiser to refrain from supporting Lagarde. When I asked the Dutch Finance Minister this afternoon about Lagarde, he said, « If she’s Europe’s candidate, I will support her. No further comment. »
UPDATE 25 MAY 2011
This morning, Christine Lagarde formalised her candidacy and sent her letter of application — in English — to the Board of the IMF, on the eve of the G8 Summit in Deauville. At the press conference, she stated that she had a « perfectly clear conscience » regarding the Tapie affair and that she would maintain her candidacy, despite the impending investigation. The Court of the Republic will announce on June 10 whether there will be a formal case. Interesting detail: On the same day, the IMF announces who will be DSK’s successor.
Mediapart revealed two more scandals that could lead to Lagarde’s prosecution, while the daily newspaper Libération reports on a possible conflict of interest. To say European support for Lagarde is a risky bet would be a euphemism.
UPDATE 27 AUGUST 2014
Christine Lagarde has been officially charged with ‘negligence’ in the Tapie Case. The IMF-boss refuses to resign and calls the charges ‘completely unfounded’.
UPDATE 12 DECEMBER 2016
Lagarde’s trial will start today and is due to last till December 20. One of Lagarde’s lawyers, Patrick Maisonneuve, claims his client can’t be tried until criminal courts have ruled in the cases of Tapie and other suspects. He reportedly said he will ask the court on Monday to postpone the trial on those grounds.
UPDATE 19 DECEMBER 2016
Christine Lagarde has been found guilty of one count of negligence by the Special French court. She was cleared of another count related to her initial decision to enter into the arbitration agreement.
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