Politics & Policy

More Equal Than Others

Reuters (December  2010) (emphasis added)

 Euro zone policymakers deliberately chose to “violate” the bloc’s rules in rescuing Greece and Ireland, closing ranks to protect the single currency area’s future, French Economy Minister Christine Lagarde was quoted as saying. The EU’s governing Lisbon Treaty places constraints on bailouts. European leaders agreed at a summit on Thursday to amend it by creating a permanent financial safety net from 2013.

 In comments reported on Saturday by the Wall Street Journal, Lagarde said the amendment amounted to a “major adjustment,” but that a change was necessary after the tumult of this year’s debt crisis.  Euro zone policymakers deliberately chose to “violate” the bloc’s rules in rescuing Greece and Ireland, closing ranks to protect the single currency area’s future, French Economy Minister Christine Lagarde was quoted as saying.

 The EU’s governing Lisbon Treaty places constraints on bailouts. European leaders agreed at a summit on Thursday to amend it by creating a permanent financial safety net from 2013.

In comments reported on Saturday by the Wall Street Journal, Lagarde said the amendment amounted to a “major adjustment,” but that a change was necessary after the tumult of this year’s debt crisis. The Greek and Irish bailouts and the creation of a temporary European rescue fund had been “major transgressions” of the treaty.

 ”We violated all the rules because we wanted to close ranks and really rescue the euro zone,” Lagarde was quoted as saying.

“The Treaty of Lisbon was very straight-forward. No bailout.”

Lagarde was appointed managing director of the IMF the following year.

Fast forward to 2016.

BBC:

A French court has found International Monetary Fund chief Christine Lagarde guilty of negligence but did not hand down any punishment.  As French finance minister in 2008, she approved an award of €404m ($429m; £340m) to businessman Bernard Tapie for the disputed sale of a firm. Ms Lagarde, who always denied wrongdoing, was not present in court, having left Paris for Washington DC.

The IMF board said it retained “full confidence” in her leadership. She said she would not appeal against the ruling: “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.”

…Ms Lagarde, 60, was tried on charges of “negligence by a person in position of public authority”.

Accused of allowing the misuse of public funds, rather than actual corruption, she could potentially have been sentenced to a year in prison and a fine of €15,000, but escaped a sentence and emerges from the trial without a criminal record.

Explaining the verdict, which took many by surprise, Judge Martine Ract Madoux said: “The context of the global financial crisis in which Madame Lagarde found herself in should be taken into account.”

She also cited Ms Lagarde’s good reputation and international standing as reasons.

The CJR [the court that tried Lagarde] is composed mostly of politicians rather than judges, and handles allegations of crimes committed by cabinet ministers in office. CJR trials are rare but in a similar judgment in 1999, it found another French politician, Edmond Herve, guilty of negligence over a contaminated blood case but did not punish him.

Ms Lagarde’s case originates in the early 1990s, when Mr Tapie was a majority shareholder in sports goods company Adidas. After launching a political career and becoming a cabinet minister in Francois Mitterrand’s Socialist government in 1992, Mr Tapie had to sell the company. In 1993, he sued Credit Lyonnais, a state-owned bank that handled the sale, alleging that the bank had defrauded him by deliberately undervaluing the firm. By 2007, the long-running case was referred to binding arbitration by Ms Lagarde, who at that time was finance minister under conservative President Nicolas Sarkozy. A three-member panel awarded  €404m compensation a year later, causing a public outcry.

Last year, after eight more years of legal wrangling, a French court ruled that Mr Tapie had not been entitled to compensation and should repay the €404m. In its verdict, the CJR said Ms Lagarde should have asked her aides and others for more information about the “shocking arbitration award” that included damages of €45m.

NPR:

The International Monetary Fund’s executive board expressed its “full confidence” in IMF Managing Director Christine Lagarde on Monday, hours after she was found guilty of negligence for improperly overseeing a 2008 case when she was France’s finance minister.

 The causes of rising populist discontent continue to be a mystery. 

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