Christine Lagarde, the head of the International Monetary Fund, has been found guilty of criminal charges linked to the misuse of public funds dating to her time as France’s finance minister.
She will not serve jail time or have to pay a fine. But her position at the Washington-based IMF is on shaky ground, at a time when the organisation faces questions over its participation in a multibillion-dollar bailout for Greece and uncertainty about the role of the United States in the organisation. The fund’s executive board will meet later Monday to consider its options.
Here is a quick primer on the case.
Q: What was she charged with?
A: Lagarde was accused of “negligence by a person in a position of public authority,” relating to a 2007 arbitration case involving Bernard Tapie, a French tycoon close to Nicolas Sarkozy, then France’s president. In the case, Tapie was awarded more than 400 million euros, or $430 million (Dh1.6 billion), to settle a dispute with the partly state-owned bank Credit Lyonnais.
The size of the award stunned and angered the French public, and some of Lagarde’s advisers suggested that she take action to appeal the arbitration decision. But she declined to do so because, her lawyer said, it would have resulted in costly new lawsuits by Tapie.
She maintained her innocence throughout the trial, calling the charges politically motivated.
Q: What court heard the charges?
A: The case was heard by the Cour de Justice de la Republique, a special court founded in 1993 to consider criminal cases against government officials. It is made up of 12 Parliament members and three Supreme Court justices.
Prosecutors had halted the investigation into Lagarde in September 2015, citing insufficient evidence against her. But the special court demanded that she stand trial anyway. The ruling also runs counter to the views of the case’s prosecutor, who said Thursday that the evidence against Lagarde was “very weak.”
Q: What’s next for Lagarde?
A: Lagarde can appeal the case on procedural grounds to France’s highest criminal court, the Cour de Cassation. But her lawyer has suggested she may not because there was not any punishment. The court, which noted her national and international stature, spared her a criminal record.
Her position in the IMF is under scrutiny. At the fund’s executive board meeting on Monday, the board could ask for her resignation immediately, or Lagarde could offer it voluntarily.
But both of these steps are considered remote, given that the board just backed her for a second term in February.
Q: What happens to the IMF?
A: The IMF’s directors have been well aware of Lagarde’s legal difficulties in France, which have dogged her for around a decade. With the spectre of an acquittal rising, it was expected that Lagarde would quickly move past the issues.
The surprise verdict could increase pressure on the fund to widen its leadership search. The IMF’s practice of awarding the top job to a senior European official has come under increased criticism in recent years, especially as the influence of emerging economies has grown.
Of the past six leaders of the fund, four have come from France. The past two — Lagarde and her predecessor, Dominique Strauss-Kahn — have encountered serious legal problems.
