International Monetary Fund (IMF) chief Christine Lagarde escaped punishment and kept her job on Monday despite being found guilty of negligence charges over a massive state payout made to a tycoon while she served as France’s finance minister in 2008.
The executive board representing the IMF’s 189 member countries reaffirmed its ‘full confidence’ in Lagarde’s ability to lead the crisis lender, hours after the verdict came from a panel of judges in Paris with no fine or jail term.
Here is a brief timeline of the events that led up to the judgement:
- In 1993, French businessman and politician Bernard Tapie, who was then the owner of German sporting goods giant Adidas, sold the company for 315.5 million euros to a consortium of organisations including France’s State Lyonnais.
- In 1994, Credit Lyonnais, sold Adidas, on ‘behalf of Tapie’, to Robert Louis Dreyfus for 701 million euros. The sale was made allegedly without informing Tapie.
- From 1994 onwards, Tapie was involved in a legal battle with the partly state-owned bank, Credit Lyonnais.
- In 2007, on the behest of the then French Finance Minister Christine Lagarde, a private arbitration panel investigated the ongoing case and found Tapie worthy of compensation for fraudulent sale of Adidas to RL Dreyfus.
- In 2008, despite the opposition of the Finance Ministry, Tapie was awarded 285 million euros plus interest (almost 410 million euros) as compensation for the fraudulent sale. Lagarde signed off on the judgement, closing the 13-year old Adidas case.
- In 2011, a petition for probe into Lagarde’s role in the settlement of the Adidas dispute and alleged abuse of power is filed in the Court of Justice for the Republic (CJR) which tries politicians, both present and former, of their crimes in the European Union. This was also the year that Lagarde was named Chief of IMF.
- In 2013, Tapie, along with Lagarde’s Chief of Staff from her Finance Minister days, Stephane Richard, were charged with gang-related fraud along with some others, including one of the members from the 2008 arbitrating panel and Tapie’s lawyer.
- Lagarde’s residence was raided by police who were investigating a case of funds-embezzlement and complicity in forging documents . The ex-minister denied any role in the incident.
- In 2015, an appeals court overruled the 2008 panel’s judgement and ruled that Tapie was in fact guilty of embezzlement. He was held liable to return the previous compensation wrongly awarded to him in 2008, along with interest (404 million euros). The arbitration rewarded to him was deemed fraudulent.
- CJR had been investigating Lagarde since then to determine the extent of her involvement in the transaction, if any. The accusations against her were mostly about her ‘allowing the misuse of public funds’, as BBC reports, rather than actual corruption.
Lagarde has been held guilty of ‘negligence’ in the Adidas case, though she has not been awarded a sentence or fine.
In fact, the IMF as well as the French government, have expressed ‘full confidence’ in Lagarde, who is the first woman to hold the Finance Ministry office in France and is also one of the most important women in global finance. (She has been the Chairman of financial giant Baker and McKenzie for over six years).
Many have been critical of the lenient view taken by the court over the case which could have earned Lagarde a hefty fine and a one-year prison term. Instead, she has been let off without a criminal record.
Judge Martine Ract Madoux , who oversaw the ruling, said that the timing of the sale, which coincided with the global economic crisis of 2007, needs to be considered when arbitrating the case. The good reputation Lagarde enjoys in the international community is also seen as helping swing the sentence her way.
60-year-old Lagarde, who says she is not quite satisfied with the judgement has said that she will not appeal to the court again,claiming that sometimes one needed to move on to the next thing.
(With inputs from AFP and Reuters)
(Feature Image Source: Reuters)