Lagarde keeps IMF job, escapes penalty after negligence conviction in France

Mon Dec 19, 2016 7:40pm EST
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By Chine Labbé and David Lawder

PARIS/WASHINGTON (Reuters) - International Monetary Fund chief Christine Lagarde escaped punishment and kept her job on Monday despite a conviction on negligence charges over a state payout made while she served as France's finance minister in 2008.

The executive board representing the IMF's 189 member countries reaffirmed its full confidence in Lagarde's ability to lead the crisis lender, hours after the verdict was issued by a panel of judges in Paris with no fine or jail term.

Lagarde told reporters at IMF headquarters that she would not appeal the decision after vigorously fighting the charge since she took the IMF's helm in 2011.

"I have been held negligent, but without penalty, without sanction, without registration of the decision," she said. "I am not satisfied with it, but 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."

In Monday's ruling, the judges did not find negligence in Lagarde's decision to seek an out-of-court settlement with tycoon Bernard Tapie, but they said her failure to contest the award to him of about 400 million euros ($417 million) was negligent and led to a misuse of public funds.

The lead judge on the case, Martine Ract Madoux, explained the absence of any sentence by citing Lagarde's preoccupation with the 2008-09 financial crisis that was raging at the time of the payout as well as her strong international reputation. The charge could have carried a maximum one-year prison sentence.

U.S. Treasury Secretary Jack Lew called Lagarde a "strong leader," adding: "We have every confidence in her ability to guide the fund at a critical time for the global economy."

But the conviction may still work against Lagarde in her campaign to push back against a wave of protectionist sentiment and populist mistrust of public officials. She has called on IMF member countries to better promote the benefits of trade and globalization and adopt policies that combat growing inequality.   Continued...

Managing Director of the International Monetary Fund (IMF) Christine Lagarde reacts before the start of her trial about a state payout in 2008 to a French businessman, at the courts in Paris, France, December 12, 2016.  REUTERS/Charles Platiau