French judges on Monday found IMF chief Christine Lagarde guilty of negligence for failing to challenge a 400 million euro state arbitration payout to a business tycoon in 2008 when she was French finance minister.
The ruling risks triggering a new leadership crisis at the International Monetary Fund after Lagarde’s predecessor Dominique Strauss Kahn resigned in 2011 over a sex assault scandal.
Christine Madeleine Odette Lagarde is a French lawyer and politician who has been the Managing Director (MD) of the International Monetary Fund (IMF) since 5 July 2011.
Previously, she held various ministerial posts in the French government: she was Minister of Economic Affairs, Finance and Employment, Minister of Agriculture and Fishing and Minister of Trade in the government of Dominique de Villepin. Lagarde was the first woman to become finance minister of a G8 economy and is the first woman to head the IMF.
A noted antitrust and labour lawyer, Lagarde was the first female chairwoman of the international law firm Baker & McKenzie between 1999 and 2004.
On 16 November 2009, the Financial Times ranked her the best Minister of Finance in the Eurozone.
On 28 June 2011, she was named as the next MD of the IMF for a five-year term, starting on 5 July 2011, replacing Dominique Strauss-Kahn. Her appointment is the 11th consecutive appointment of a European to head the IMF.
In 2014, Lagarde was ranked the 5th most powerful woman in the world by Forbes magazine. She was re-elected by consensus for a second five-year term, starting 5 July 2016, being the only candidate nominated for the post of managing director.
On 3 August 2011, a French court ordered an investigation into Lagarde’s role in a €403 million arbitration deal in favour of businessman Bernard Tapie.
On 20 March 2013, Lagarde’s apartment in Paris was raided by French police as part of the investigation.
On 24 May 2013, after two days of questioning at the Court of Justice of the Republic (CJR), Lagarde was assigned the status of “assisted witness”, meaning that she was not herself under investigation in the affair.
According to a press report from June 2013, Lagarde has been described by Stéphane Richard, the CEO of France Telecom (a former aide to Lagarde when she was Finance Minister), who has himself been put under formal investigation in the case, as having been fully briefed before approving the arbitration process which benefitted Bernard Tapie.
Subsequently in August 2014 the CJR announced that it had formally approved a negligence investigation into Lagarde’s role in the arbitration of the Tapie case.
On 17 December 2015, the CJR ordered Lagarde to stand trial before it for alleged negligence in handling the Tapie arbitration approval.
Despite the ruling the judges did not hand down any sentence in the case on her decision to allow the rare out-of-court arbitration payment. She has denied the negligence charges.
Her lawyer said immediately after the ruling that his team would look into appealing the decision.