A day after a French court found International Monetary Fund (IMF) chief Christine Lagarde guilty of negligence over a massive state payout to a French business tycoon, the IMF Board is set to meet in Washington to discuss the court’s decision.
Even though Lagarde was found guilty, the special court in Paris spared her a fine or prison sentence citing her “international reputation” and also the fact that in 2008 she was busy fighting a global financial crisis.
On Monday, the court rapped Lagarde for failing to contest the massive payment to businessman Bernard Tapie when she was the French finance minister. In the dispute between the state and Tapie, the businessman ended up winning a 404-million-euro (USD 422 million) award, linked to his sale of the Adidas sportswear brand to Credit Lyonnaise bank.
The ruling was a rare setback in Lagarde’s glittering career.
The high-flying 60-year-old former corporate lawyer became the first female IMF chief in 2011, succeeding her disgraced compatriot Dominique Strauss-Kahn.
Lagarde was not in Paris for the ruling but her lawyer Patrick Maisonneuve told reporters 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 capacity to carry out her responsibilities”.
Lagarde was tried over her decision to allow the long- running 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 members of parliament that hears cases against ministers accused of wrongdoing in office.
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 45 million euros in “moral damages” for alleged emotional harm – a sum included in the arbitration award.
(With inputs from agencies)