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French Court Orders Lagarde to Appear in Tapie Case

April 19, 2013 by Leave a Comment

PARIS — A French court has ordered Christine Lagarde, the managing director of the International Monetary Fund, to appear at a hearing next month connected to an investigation of her handling of a financial scandal when she was the French finance minister.

On Thursday, Ms. Lagarde’s lawyer confirmed the court summons, which was first reported late Wednesday by the news Web site Mediapart.

The investigation, which has included a police raid of Ms. Lagarde’s Paris apartment last month, concerns her decision in 2007 to refer to an arbitration panel a decades-old dispute between a wealthy friend of France’s president at the time, Nicolas Sarkozy, and the state-owned bank Crédit Lyonnais. The panel ultimately brokered a settlement that awarded the Sarkozy friend, Bernard Tapie, the flamboyant former owner of the Olympique Marseille soccer team, about $580 million, including interest.

The court’s summons of Ms. Lagarde could lead to the opening of a formal investigation of her role in the affair. But in France, being placed under formal investigation does not necessarily lead to charges and does not imply a presumption of guilt.

Ms. Lagarde has repeatedly denied any wrongdoing in the Tapie matter and has expressed her willingness to cooperate with the investigation.

Asked about the Tapie affair at a news conference at the opening of the World Bank and I.M.F. spring meetings, Ms. Lagarde said that she had known of the possibility of being interviewed by the investigative commission since 2011.

“There is nothing new under the sun,” Ms. Lagarde said, dismissing any concerns about the investigation or its bearing on her position at the head of the fund. “I will be very happy to travel for a couple days to Paris,” she said, adding that it would not change her focus or attention on her job. “I look forward to it.”

In a statement Thursday, Ms. Lagarde’s lawyer, Yves Repiquet, said the Court of Justice of the Republic — a special court that investigates allegations of misconduct by government ministers — had scheduled a hearing for the end of May, although he did not indicate a precise date.

“This hearing will be Mrs. Lagarde’s first opportunity to provide the investigative commission with information that will demonstrate that there is no basis to find fault with her actions,” Mr. Repiquet said.

A spokesman for the court did not respond to a request for comment.

The court is seeking to determine whether Ms. Lagarde was complicit in the misuse of public money in what critics say was an overly generous arbitration award to Mr. Tapie, a former Socialist politician who switched allegiance in 2007 to support Mr. Sarkozy’s center-right party, Union for a Popular Movement.

The dispute involved a loan of 1.6 billion French francs that Mr. Tapie that took out from Crédit Lyonnais to buy the distressed Adidas sports empire in 1989. Unable to keep up with the interest payments, Mr. Tapie converted his bank debt into shares of Adidas, which Crédit Lyonnais later sold in 1993 for more than the value of the loan. Mr. Tapie accused the bank of cheating him.

Mr. Sarkozy, when he became president in 2007, suggested that the Finance Ministry — which had been overseeing the dispute and was led by Ms. Lagarde — move the case to arbitration.

In a French television interview in January, Ms. Lagarde said that referring the dispute to arbitrators was “the best solution at the time.”

The I.M.F. has until now declined to comment on the French case, although officials have said the fund’s board was aware of the possibility of French legal proceedings against Ms. Lagarde before its decision to appoint her as managing director in 2011. Ms. Lagarde requested at the time that her right to diplomatic immunity in the case be waived to allow her to participate in her defense.

Annie Lowrey contributed reporting from Washington.

Article source: http://www.nytimes.com/2013/04/19/business/global/french-court-orders-lagarde-to-appear-in-tapie-case.html?partner=rss&emc=rss

Filed Under: Global Business Tagged With: , ,

Terms of Greek Bond Buyback Top Expectations

December 4, 2012 by Leave a Comment

While the buyback had been expected, the prices offered by the government were above what the market had forecast, with a minimum price of 30 euro cents and a maximum of 40 cents, for a discount of 60 percent to 70 percent.

Analysts said they expected that the average price would ultimately be 32 to 34 euro cents, a premium of about 4 cents above where the bonds traded at the end of last week.

Pierre Moscovici, the French finance minister, played down concerns that the Greek debt buyback might not go as planned.

“I have no particular anxiety about this,” Mr. Moscovici said Monday at the European Parliament ahead of the meeting in Brussels of euro zone finance ministers to discuss Greece. “It just has to be very quick.”

A successful buyback is critical for Greece. The International Monetary Fund has said that it will lend more money to Greece only if it is reasonably able to show that it is on target to achieve a ratio of debt to annual gross domestic product of less than 110 percent by 2022.

Greece will have at its disposal 10 billion euros, or $13 billion, in borrowed money from Europe. Investors who agree to trade in their Greek bonds will receive six-month treasury bills issued by Europe’s rescue vehicle, the European Financial Stability Facility. The offer will close Friday.

If successful, the exchange will retire about half of Greece’s 62 billion euros in debt owed to the private sector. The country still owes about 200 billion euros to European governments and the I.M.F.

Analysts said that Greek, Cypriot and other government-controlled European banks, which have as much as 20 billion euros worth of bonds, were expected to agree to the deal at a price in the low 30s. That would mean that to complete the transaction, hedge-fund holdings of 8 billion to 10 billion euros in bonds would have to be tendered at a price below 35 cents. Any higher price would mean that Greece would have to ask its European creditors for extra money — an unlikely outcome at this stage.

Even though Greece is so close to bankruptcy, its bonds have become one of the hot investments in Europe. Large hedge funds, like Third Point and Brevan Howard, have accumulated significant stakes, starting this summer when the bonds were trading in the low teens. Shorter-term traders have been snapping up bonds at around 29 cents to make a quick profit by participating in the buyback.

In a research note published Monday, analysts at Nomura in London said it was “reasonable and likely” that enough hedge funds — especially those that might be more risk-averse and or have a shorter perspective — would agree to the deal at a price below 35 cents.

But there are also foreign investors looking to the longer term who may decide to hold onto most of their holdings in the hope that the bonds rally even more after a successful buyback.

“I think the bonds could go to as high as 40 cents in a nonexit scenario,” said Gabriel Sterne, an analyst at Exotix in London, referring to the consensus view that Greece will not leave the euro zone anytime soon.

Bondholders were encouraged by comments from Chancellor Angela Merkel of Germany, reported in the German news media over the weekend, that raised the possibility that European governments might offer Greece debt relief in the future. A number of bondholders expect Greek bond yields to trade more in line with those of Portugal in the coming years, but without the prospect of a future buyback to push up the prices of Greek government bonds, the risk to such an approach is substantial.

Jean-Claude Juncker, the president of the group of finance ministers whose countries use the euro, told a news conference late Monday in Brussels that ministers would meet again on the morning of Dec. 13 to make a final decision on aid disbursement to Greece.

Mr. Juncker said he was confident that Greece would receive its money on that date, but he declined to comment on the prospects for success of the buyback program because it was a sensitive matter for the financial markets.

Mr. Juncker has been the president of the group of ministers since 2005, and the post gives him significant power over what is discussed at the group’s meetings.

Mr. Juncker reiterated at the news conference that he would step down at the end of this year or at the beginning of next year. But he declined to signal his preference for any particular successor.

“I don’t have to endorse anyone,” Mr. Juncker said. “I was asking my colleagues to provide for my succession,” he said, referring to discussions held with ministers earlier in the evening.

Separately, Spain, which is also seeking to overcome crippling debt problems, began the process Monday of formally requesting 39.5 billion euros in emergency aid to recapitalize its banks. It also announced that a tax amnesty had yielded only 1.2 billion euros, less than half what the government had expected.

The request for emergency aid was being sent to authorities managing the euro zone bailout funds, according to Spanish officials, who added that no further approval would be needed from ministers meeting in Brussels.

The request follows the European Commission’s approval last week of a plan to make the granting of the aid conditional on thousands of layoffs and office closings at four Spanish banks: Bankia, Catalunya Banc, NCG Banco and Banco de Valencia.

James Kanter contributed reporting from Brussels.

Article source: http://www.nytimes.com/2012/12/04/business/global/greece-announces-terms-of-13-billion-bond-buyback-to-slash-debt.html?partner=rss&emc=rss

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Kostas Vaxevanis, Cleared of Privacy Violations, Faces Retrial

November 17, 2012 by Leave a Comment

The publisher, Kostas Vaxevanis, who owns and edits Hot Doc, a respected investigative magazine, was acquitted of misdemeanor charges by a judge on Nov. 1 after publishing what he called the Lagarde list — a list of account holders given to Greek authorities in 2010 by Christine Lagarde, when she was the French finance minister.

The case shone a light on the Greek authorities’ failure to effectively crack down on widespread tax evasion and fueled a debate over media freedom and personal privacy laws. Now, Mr. Vaxevanis is to be retried in a higher-level misdemeanor court on the same charges, and faces a two-year prison sentence if he is found guilty.

The Athens public prosecutor’s office found the judge’s verdict in Mr. Vaxevanis’s case to be “legally mistaken” and wants it re-examined, a court official said, adding that a date for a retrial had yet to be set.

“Such appeals by the prosecutor are not unusual, particularly in cases where personal privacy are concerned,” said Aristides Hatzis, a professor of law at the University of Athens, attributing the two-week delay between the verdict and the appeal to “standard judicial bureaucracy.”

During the trial, the prosecutor, Iraklis Pasalidis, accused Mr. Vaxevanis of “turning the country into a coliseum” by defaming people without determining their guilt. The publisher had countered that the names of bank account holders were not private and that the Lagarde list was “not a legal issue but a very important social and political one.”

In a Twitter post on Friday, Mr. Vaxevanis said, “While society demands disclosure, they cover up.”

Article source: http://www.nytimes.com/2012/11/17/world/europe/kostas-vaxevanis-cleared-of-privacy-violations-to-be-retried.html?partner=rss&emc=rss

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Greek Editor Not Guilty in Publishing Names With Swiss Accounts

November 2, 2012 by Leave a Comment

The verdict came four days after a phalanx of police officers arrested the editor, Kostas Vaxevanis, as his magazine, Hot Doc, hit newsstands with the list. Before a packed court, Mr. Vaxevanis and his lawyers portrayed him as the target of a politically motivated campaign aimed at damping the public anger at Greek officials.

The list that Mr. Vaxevanis obtained and published was handed to the Greek authorities two years ago by Christine Lagarde, then the French finance minister and now the head of the International Monetary Fund, to help Greece crack down on tax evasion as it was trying to mend its economy. The list held names of 2,059 Greeks who held accounts at a Geneva branch of the British bank HSBC, which includes a former culture minister, several employees of the Finance Ministry and a number of business leaders. “The court finds the defendant innocent,” Judge Malia Volika said in handing down the decision.

Mr. Vaxevanis emerged from the packed courtroom to cheers from a large crowd. He hailed the “courage” of the judge, adding: “Journalism for far too long has been a hostage to political forces that don’t allow it to work. This decision sets a precedent that allows my colleagues to do their jobs without political handcuffs.”

In his testimony, Mr. Vaxevanis accused politicians of sitting on the information to protect powerful interests. He charged that Greece was governed by a small coterie of business elites protected by politicians and by news organizations owned by a handful of influential Greek magnates.

“Greek people have known for two years now that there is a list of people who are rich, rightly or wrongly, and they are untouchable,” Mr. Vaxevanis told the court. “At the same time, the Greek people are on the other side, they are suffering cuts.”

“The political system has been hiding the truth for so long,” he said.

At times, the courtroom took on a chaotic atmosphere, with a court-appointed interpreter botching the Greek translation for a British journalist testifying for the defense, and Mr. Vaxevanis’s lawyers shouting in protest. Cellphones rang and cigarette smoke wafted through the standing-room-only chamber as the judge, sitting beneath a Greek Orthodox painting of Jesus, banged the table with her hand to restore order.

The prosecutor, Iraklis Pasalidis, called no witnesses and sat stone-faced during most of the trial. He submitted a blank witness list to the judge, a move that one lawyer deemed “an analogy of the blank nature of the allegations.”

Mr. Pasalidis nevertheless argued strongly that Mr. Vaxevanis should be found guilty for defaming people without determining their guilt. “These are the culprits, take them and crucify them,” Mr. Pasalidis told the court. “Is this a solution to the country’s problems? Cannibalism?”

The argument did not prevail.

To support his case, Mr. Vaxevanis cited one of those named: Lavrentis Lavrentiadis, a Greek oligarch and the former chairman of Proton Bank.

Proton received a bailout of $129 million arranged by Evangelos Venizelos, a former finance minister.

A financial prosecutor is now examining whether Mr. Venizelos and George Papaconstantinou, another former finance minister, told Greek tax authorities not to investigate those on the list. On Thursday, the prosecutor asked Parliament to investigate whether any politicians should face criminal charges for failing to determine whether any of the individuals on the list were guilty of tax evasion.

Defense lawyers disputed the charges that Mr. Vaxevanis violated privacy laws, noting that none of the people named had filed a complaint over privacy violation.

Dimitris Bounias contributed reporting.

Article source: http://www.nytimes.com/2012/11/02/world/europe/greek-editor-not-guilty-in-publishing-names-with-swiss-accounts.html?partner=rss&emc=rss

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On Global Charm Offensive, Lagarde Promises Support to Developing Countries

June 7, 2011 by Leave a Comment

NEW DELHI — French Finance Minister Christine Lagarde promised Tuesday to support emerging markets so wholeheartedly that a little part of her “would turn Indian” if she were elected head of the International Monetary Fund.

Ms. Lagarde appeared in India’s capital as part of a global campaign to win support from developing nations for her candidacy. In late May she visited Brazil, and on Wednesday she is slated to meet officials in Beijing.

The IMF “does not belong to anybody,” but to all 187 member nations, she told reporters at the French Embassy in New Delhi.

Developing nations have been agitating for one of their own to fill the top slot at the International Monetary Fund since the post became vacant in May, when France’s Dominique Strauss-Kahn stepped down amid accusations of sexual assault.

If elected, Ms. Lagarde said Tuesday, she would “stand on my feet as a woman,” adding that she would stand “with a level of testosterone that would be lower.”

She also said she would continue reforms that have given emerging markets more weight in the fund’s decision-making process.

Ms. Lagarde met earlier Tuesday with the prime minister of India, Manmohan Singh, and Finance Minister Pranab Mukherjee. Mr. Mukherjee told reporters after the meeting that India had not yet decided to back Ms. Lagarde, and that India would like to be part of a consensus of nations that chooses a new managing director for the fund.

During the press conference Tuesday evening, Ms. Lagarde said she was not in town to ask for Indian officials’ backing because that would be premature. Instead, she said, she was in India to present her candidacy and listen to concerns.

Indian officials expressed the “unanimous view” on Tuesday that “nationality is not the criteria — the criteria should be the merit of the candidate on its own rights,” she said.

Developing countries, which emerged relatively unscathed from the financial crises in recent years, are seeking a larger voice in international institutions as Europe and America continue to struggle with debt, unemployment and uncertain economic futures.

Ms. Lagarde said Tuesday that her experience dealing with the financial crisis was “an experience I would never forget” and one that taught her the value of coordination with other I.M.F. members.

Since the I.M.F. was created after World War II to promote global economic stability, it has always had a European as its elected managing director.

Mexico’s central bank governor, Agustín Carstens, is so far Ms. Lagarde’s only real challenger, but he has yet to win the open support of the largest developing nations. He will visit India later this week and China and Japan next week.

A lack of unity among emerging markets may mean their chance to head the fund this time is slipping away, some experts said.

“There is consensus on the principle that their candidates should be given a fair chance but no consensus on a particular candidate,” said Eswar Prasad, Cornell University’s senior professor of trade policy and the former head of research in the IMF’s financial studies division. “This effectively seals the deal in favor of Lagarde.”

Although nominations for the managing director slot do not close until Friday, some economists say the battle is already lost.

“Emerging countries have no chance and clearly are now backing Ms. Lagarde so that they can get some benefit out of the European powers during her term,” said Surendra L. Rao, an economist based in Bangalore.

Europe and the United States retain 45 percent of the voting rights in the IMF, but emerging market countries’ shares have been increasing as their economies grow. India carries a 2.35 percent voting share, the third largest of the major emerging market countries, after China’s 3.82 percent stake and just behind Russia’s 2.4 percent stake. Brazil trails with a 1.72 percent vote.

On May 24, the world’s leading emerging market nations voiced their desire for a more authority to choose a leader for the fund. In a joint statement, Brazil, Russia, India and China advocated “abandoning the obsolete unwritten convention that requires that the head of the IMF be necessarily from Europe.”

In India’s case, top officials stopped short of endorsing Lagarde but still indicated they consider her an ally.

On May 27, India’s minister of commerce and industry, Anand Sharma, met with Ms. Lagarde on the sidelines of an international trade meeting in Paris. “India has high regard for her record as chair of the G-20 and sees her as a friend,” Mr. Sharma’s office said in a statement about their discussion.

Rather than rallying behind an emerging market candidate during this election, “each of the key emerging markets is using the opportunity to position itself better for the next round and extract what it can from this round,” Mr. Prasad said.

Ms. Lagarde should demonstrate that “she is well aware that the world has changed, and that India, China, Brazil, South America or one of the other economies could provide the next president,” Mr. Prasad said.

Nida Najar contributed reporting.

Article source: http://feeds.nytimes.com/click.phdo?i=bcea0260ca1e4ec364a6cee370ed2ae8

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