August 4th, 2011
09:04 PM GMT
When confronted with the news that his client will face an investigation, Christine Lagarde’s lawyer said "she’s not worried at all and neither am I."
The words might as well have been spoken by the new International Monetary Fund managing director herself: They were so frank and to the point.
Lagarde is accused of intervening in a long-running court dispute between French tycoon Bernard Tapie and the bank Credit Lyonnais when she was France’s finance minster. The case was settled in 2008 and saw Tapie awarded $340 million - a seemingly large sum which should be weighed against the costs of a long-running legal battle.
She denies any wrongdoing.
Lagarde took the reins of the IMF in July after previous head Dominique Strauss-Kahn was arrested on allegations of sexual misconduct with a chambermaid in New York. He denies the charges.
The news of the French court enquiry into Lagarde’s conduct raises two questions of an entirely separate nature.
One, what does it mean for her international career?
Two, what does it mean for her political future in France?
The resurgence of ‘l’affaire Tapie’ may have sceptics or indeed many outside France asking themselves why such high-achieving French politicians have been followed by scandal.
Though the cases are completely different in nature, one issue remains key for staff at the fund: Safeguarding the reputation of the institution tasked with managing the world’s economy.
Once seen as a bank of last resort to bankrupt developing nations, never before has the IMF been so crucial to the world’s richest countries, ones which effectively run it.
As the eurozone crisis spreads and the U.S. debt pile grows Lagarde needs the fewest distractions possible to help prevent the West from entering a double dip recession.
For this reason, it is hard to see her allowing the case to overshadow her work at the Washington institution. Likewise, it is difficult imagining leaders in France and beyond allowing that either.
Of course, I am no lawyer and French justice must run its course.
The question becomes more tricky when one considers whether Madame Lagarde wants to return to politics in her home country.
Lagarde is accused of abusing her authority in the Tapie case when she was France’s finance minister. Because the French state owned Credit Lyonnais the case came under her brief.
She is alleged to have given Tapie preferential treatment because of his support for French President Nicolas Sarkozy, as well as settling through private arbitration a matter concerning public funds.
The news of a fully-fledged court enquiry comes ahead of next year’s general elections, at a time when her former boss, the President, is seeing his popularity wane in the polls.
In a welcome video to her new IMF colleagues, Lagarde indicated her commitment to serve the full five year mandate, saying ‘my plan is to stay with you for the next five years,’ but after that some still wonder whether she has her sights on the top job back home.
She was the first female finance minster of a G7 nation, the first woman MD of the IMF, whether she wants to be France’s first ‘Madame le President,’ only Lagarde will know.
If she does, this is where a long-running court case could become unpleasant – for now it’s not.
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