An inquiry into recently appointed IMF chief Christine Lagarde's actions as French finance minister won't jeopardise her position, lawyers say. The investigation, announced Thursday, will look into allegations of abuse of power.
Christine Lagarde is to be investigated in France over her involvement in a controversial legal wrangle between a top businessman and a state-owned bank. The decision to probe the former minister, made Thursday by a special court, comes after years of speculation and Socialist efforts to see her investigated.
Lagarde is accused of unfairly intervening in a long-running legal battle between media mogul Bernard Tapie and then state-owned bank Crédit Lyonnais, in 2008. After Lagarde – then finance minister – ordered that the case be settled out of court, Tapie won a settlement of €285 million euros. Despite objections from advisors, Lagarde then chose not to oppose the decision. Suspicions were amplified due to Tapie’s links with President Nicolas Sarkozy, who had taken office a few months earlier.
Asked about the case at her very first press conference as head of the IMF earlier this month, Lagarde confidently replied that she had “no concerns whatsoever.” The IMF board reiterated her claims in a statement on Thursday, saying they were “confident that she will be able to effectively carry out her duties as managing director”.
Paris-based economist Frédéric Bonnevay went even further, saying that the inquiry could be “harmful” to France’s image. “This is counter-productive,” he argued. “The interests of the state should come above implicating [Lagarde].” Bonnevay described the timing as “inappropriate," given recent events. “The public are bound to view this negatively, especially in the US. It could also distract the IMF leaders from their work, when they’ve already got enough to do.”
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The Court of Justice of the Republic (CJR) will now investigate Lagarde for “abuse of authority”. If charged, she will face up to 10 years in prison and a fine of up to €150,000.
Recently appointed for a five-year-term at the top of the International Monetary Fund, Lagarde replaces her compatriot Dominique Strauss-Kahn, who resigned in the wake of sexual assault and rape allegations. This latest scandal has sparked concerns that Lagarde might drag the institution through a new debacle.
Lagarde shouldn’t lose any sleep
Immediately after the CJR’s announcement Thursday, Lagarde’s lawyer, Yves Repiquet, declared that the inquiry was “in no way" conflicting with her functions as head of the IMF. Despite the potential investigation in France, Lagarde was chosen over a handful of candidates.
“As the IMF was well aware of the possibility of Lagarde being investigated over this, I think it’s fair to say the inquiry won’t have much impact on her, or her job at the IMF,” Chistopher Mesnooh, Paris-based lawyer at Field Fisher Waterhouse, told FRANCE 24. “It would have been quite a different story, however, if the IMF hadn’t been aware.”
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While the investigation is to begin imminently, its conclusion is not expected for some years. “There are some very complicated and subtle legal issues involved,” explains Mesnooh. “The process could be sped up if there was a real political desire to have it done so. But with [the presidential election in] 2012 looming, it’s probably going to take years.”
France is the biggest victim
Just months after the departure of Dominique Strauss-Kahn – forced to resign over rape allegations that shamed France – this new scandal could tarnish the country’s reputation abroad even further. “The Strauss-Kahn scandal is still popping up in headlines here,” FRANCE 24 correspondent in Washington Phillipe Gassot said Thursday. “This new affair is not going to go unnoticed.”
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Meanwhile, among France's opposition Socialists, who had lobbied for the inquiry for years, the decision was widely praised. Parliamentary party leader Jean-Marc Ayrault described Lagarde’s actions in 2008 as “a favour” to Bernard Tapie that should never have been ignored. The rightwing UMP party however, of which Lagarde was a member until last month, offered its full support to her, describing the investigation as “nothing untoward”.
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