Despite a conviction on negligence charges over a state payout made while she served as France’s finance minister in 2008, International Monetary Fund chief Christine Lagarde escaped punishment and kept her job.
Hours after the verdict was issued by a panel of judges in Paris with no fine or jail term, the executive board representing the IMF’s 189 member countries reaffirmed its full confidence in Lagarde’s ability to lead the crisis lender.
After vigorously fighting the charge since she took the IMF’s helm in 2011, Lagarde told reporters at IMF headquarters that she would not appeal the decision.
“I have been held negligent, but without penalty, without sanction, without registration of the decision,” she said. “I am not satisfied with it, but there’s a point in time when one has to just stop, turn the page and move on and continue to work with those who have put their trust in me.”
The judges said her failure to contest the award to him of about 400 million euros ($417 million) was negligent and led to a misuse of public funds but did not find negligence in Lagarde’s decision to seek an out-of-court settlement with tycoon Bernard Tapie in Monday’s ruling.
By citing Lagarde’s preoccupation with the 2008-09 financial crisis that was raging at the time of the payout as well as her strong international reputation, the lead judge on the case, Martine Ract Madoux, explained the absence of any sentence. The charge could have carried a maximum one-year prison sentence.
U.S. Treasury Secretary Jack Lew said: “We have every confidence in her ability to guide the fund at a critical time for the global economy” and called Lagarde a “strong leader”.
But in her campaign to push back against a wave of protectionist sentiment and populist mistrust of public officials, the conviction may still work against Lagarde. To better promote the benefits of trade and globalization and adopt policies that combat growing inequality, she has called on IMF member countries.
She would now “focus all my attention, all my time, all my efforts, all my energy and enthusiasm to my mission as head of the IMF”, Lagarde said on Monday after being reappointed to a five-year term in February.
Lagarde, 60, argued in the trial last week that she had acted in good faith and with the public interest in mind and described the case as a five-year-long ordeal.
She also said that to end a costly 15-year-old legal battle between the government and Tapie, a supporter of then-President Nicolas Sarkozy, she had signed off on the arbitration – against the advice of some Finance Ministry officials.
The case dates back to when Tapie sued the French state for compensation after selling his stake in sports company Adidas to then state-owned Credit Lyonnais in 1993.
After it resold its stake for a much higher price, he accused the bank of defrauding him. Tapie was awarded a 403 million euro payout, including interest and damages with the case stuck in the courts, the two sides agreed to a private settlement.
(Adapted from CNBC)