IMF Head Lagarde Convicted of Negligence – No Prison, Fines Expected

Despite a recent French court finding her guilty of negligence, Christine Lagarde will not be facing prison or fines.

Christine Lagarde, the acting Managing Director of the International Monetary Fund (IMF), has found herself embattled with charges of negligence from a French court for her mishandling of a multi-million-euro dispute from over a decade ago, according to a recent Bloomberg report.

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As the head of the IMF, Ms. Lagarde has been one of the more central figures in European developments, which came to the forefront in recent years with her role in the bailout and Greece. However, the negligence charges predate her role as the IMF head, instead focusing on her time as France’s finance minister.

In particular, a €285 million ($300 million) payout to a businessman in an arbitration case was the situation under scrutiny, which a French court, Cour de Justice de la Republique, recently ruled on. Ms. Lagarde will not be facing a fine or prison time however, per the recent ruling from the court.

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Despite the breaking development, the trial had been an ongoing dissonance for Ms. Lagarde, which also maintains an integral role on the IMF. She was also cleared of another count, which was related to her initial decision to enter into the arbitration agreement.

Unfortunately for the IMF, the worldwide lender is suffering from public relations woes, given that Ms. Lagarde’s predecessor, Dominique Strauss-Kahn, had resigned in 2011 given allegations of sexual assault.

No Fine or Prison

Looking closer at the recent trial, Ms. Lagarde was under intense scrutiny for a dispute between state-owned bank Credit Lyonnais and businessman Bernard Tapie. The nature of the dispute was over the 1993 sale of Adidas AG – Lagarde had facilitated the disagreement to go to arbitration, however didn’t appeal the award.

Later, a subsequent government payout was cut to zero last year after doubts were cast on the impartiality of one of the three arbitrators. The French court ruled that her handling of the case showed that she was ‘negligent in seeking information’ to guide her views about a bid for annulment.

Rather, the court is suggesting that Ms. Lagarde should have instead opted for proper explanations from her staff after learning that the Tapie award included, against her own wishes, €45 million in damages. Ultimately, the French court found that the difficulty of the present economic and political content contributed to Lagarde not receiving any fine or jail time, also pointing to her international reputation as a factor.

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