October 7, 2022

French Court Puts Off Decision in Lagarde Case

As Ms. Lagarde prepared to hold her first I.M.F. board meeting on Friday to consider another $3 billion in emergency financing for Greece, the French Court of Justice, which oversees the actions of ministers in office, said it would delay until Aug. 4 a decision on whether to look into her handling in 2007 of a court case involving a French tycoon.

It was the second time in a month that the court had postponed a ruling. A court official said one of the judges had recused himself, Reuters reported. The delay means another month of legal uncertainty hangs over Ms. Lagarde.

“It’s a bit surprising,” said Christopher Mesnooh, a partner in international business law at Field Fisher Waterhouse in Paris. “Given the high-profile conditions under which she replaced her predecessor at the I.M.F., one might have thought the court would have wanted to provide legal certainty today, to allow Madam Lagarde to commence her functions with a clear mind.”

Ms. Lagarde ushered in a new era at the I.M.F. on Tuesday as the first woman to hold the post of managing director, one of the top positions in international finance. She met at the fund’s headquarters in Washington with employees still ruffled by the resignation of her predecessor, Dominique Strauss-Kahn, after he was charged with the sexual assault of a hotel maid in New York. Her contract contains a section on conduct and ethics that requires her to “strive to avoid even the appearance of impropriety.”

At issue in the French court case is whether Ms. Lagarde abused her authority as finance minister in one of France’s longest-running legal dramas.

In 2007, she ordered that a dispute between Bernard Tapie, a flamboyant French businessman and friend of President Nicolas Sarkozy, and Crédit Lyonnais, a state-owned bank, be referred to an arbitration panel. The panel ultimately awarded Mr. Tapie a settlement of about $580 million, including interest.

Mr. Tapie, a former chief of the Adidas sports empire and a former Socialist minister who changed political loyalties to support Mr. Sarkozy’s 2007 presidential campaign, accused Crédit Lyonnais in 1993 of cheating him when it oversaw the sale of his stake in Adidas.

Mr. Sarkozy suggested that the Finance Ministry, which was overseeing the case because Crédit Lyonnais was a ward of the French state, move the case to arbitration.

Ms. Lagarde defended her role in the case again this week, telling French television that she had “exactly the same confidence and peace of mind” whether the court decided to pursue investigations or not.

If the court decides later to investigate, Ms. Lagarde will have to gird for a possibly lengthy legal process, although she would not necessarily be required to be present in France.

Article source: http://feeds.nytimes.com/click.phdo?i=e39202f53c9da0c182d1820fc726975a

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