IMF Expresses its Confidence, but Lagarde not out of Woods

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IMF Chief may yet face charges of fraud and deception in 20-year-old Tapie Affair

At 08:15am on Friday Christine Lagarde entered CJR (Cour de Justice de la République) for the second day running to answer questions in relation to her handling of a protracted financial affair involving flamboyant businessman Bernard Tapie and the sale of sports shoe manufacturing company Adidas.

The CJR is a special tribunal that probes cases of ministerial misconduct in France and the IMF chief faces the possibility of being charge with fraud and misappropriation of public funds during her time as Finance Minister under the government of François Fillon.

The story of the former owner of football club Olympique de Marseille (he served 6 months in prison for match-fixing during OM’s Champions League-winning season of 1992-93) selling Adidas goes back to 1991. Tapie bought the (then) struggling German shoe manufacturer in 1991. Once he became a government minister in 1993, he put the company up for sale and entrusted Crédit Lyonnais bank with the disposal of his shares in the company.

Pocketing Big: Tapie "frankly not interested" in the fate of Lagarde after pocketing €400million

Pocketing Big: Tapie “frankly not interested” in the fate of Lagarde after pocketing €400million

After Tapie’s stewardship of Adidas, its fortunes began to change dramatically for the better. Crédit Lyonnais pocketed substantial profits from Tapie’s shares in the company, as well as in the profit in selling them on to another French businessman Robert-Louis Dreyfus. They neglected to let Mr Tapie know about any of this, however. When Tapie found out, he pursued a case for compensation. At the time, the French government owned shares in Crédit Lyonnais and were thus drawn into the whole affair.

There have been a number of rulings awarding Tapie enormous compensatory figures that range from €135 million to a staggering €403 million (including accrued interest). This latter sum was awarded in 2007 by a tribunal of arbitration – a private tribunal outside of the normal judicial system. As acting Minister for Finance, it was Lagarde who ordered the tribunal in a move that many see as being highly unusual for a case that was still going through the judicial process at the time.

The contention now is that this Lagarde-sponsored tribunal was established under highly irregular circumstances and was weighted heavily in favour of Bernard Tapie. Two of the three judges on the panel (Pierre Estoup & Jean-Denis Bredin) had links to Tapie, despite claiming to have none with the former Mayor of Marseilles, government minister and MEP.

Christine Lagarde finally got to go home at 9pm on Friday night after a long day of questioning. For now, the IMF is officially expressing confidence in her as Director General of the global bank. Even current Finance Minister Pierre Moscovici has rowed in with his thumbs-up for the silver-haired girl of French politics, saying that the 57-year-old has the “full confidence of the French authorities and of myself.” But will that confidence last if she is charged with deception and mis-appropriation of public monies?

Government spokesperson Ms Najat Vallaud-Belkacem doesn’t think so: “Mme Lagarde isn’t a member of government. If she was, we would have very clear rules… Knowing the IMF and the way it operates in cases like this, I would tend to believe that if she was charged, then she would certainly be asked to step down from her role (in the IMF)… but it’s not for me to say. As of today, she hasn’t yet been charged.”

On radio during the week, Tapie himself was sanguine about the whole affair, pouring scorn on the notion that there was anything irregular about the tribunal that settled his Adidas business after a 14-year wait:

“The judicial situation of Mme Lagarde frankly doesn’t interest me at all and doesn’t concern me at all. Mme Lagarde is in the opposite camp – she’s the Minister of Finance, the representative of the state as owner of the bank. I have my camp and she has hers.”

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