October 25, 2016

IMF’s Lagarde seeks second term in shadow of court case

IMF chief Christine Lagarde

Christine Lagarde launched her campaign for a second term as managing director of the International Monetary Fund on Friday with ringing endorsements from a host of major economies – and a court case against her looming in her native France.

The former French finance minister who trained as a lawyer has no obvious challengers and has long been open to serving another five-year term. The prime ministers of Britain and France backed her publicly on Thursday.

“I am candidate for a new mandate. I was honoured to receive from the start of the process the backing of France, Britain, Germany, China, Korea,” Lagarde, 60, told France 2 television in an interview from the World Economic Forum in Davos.

Germany’s finance ministry weighed in with its own endorsement on Friday.

“Germany welcomes the renewed candidacy of Christine Lagarde for a further term as managing director of the IMF. Ms Lagarde was a prudent and successful crisis manager in the difficult times after the financial crisis,” the finance ministry said in a statement.

The early endorsements from such powerful economies may act as a disincentive for others to apply and mute any talk of her legal difficulties disqualifying her.

Lagarde has been dogged off-and-on since her initial appointment in 2011 for her role in a long-running business scandal while she was France’s finance minister.

Last month, a French judge ordered her to face trial for negligence in a special ministerial court over the 2008 payout of some 400 million euros ($430 million) to businessman Bernard Tapie.

Tapie himself was ordered last year to repay the money, which he received as state compensation for a business transaction in which he later claimed he had been defrauded.

Lagarde has said she will appeal the judge’s order.

“I feel that I always acted in the state’s interest and within the law. I have my conscience for me in this affair. I hope the courts … will agree with that,” she told France 2 on Friday.


Aside for the legal problems, her candidacy is likely to raise questions among some emerging countries about whether a European should still lead the Washington-based institution.

Although there is no formal requirement that the leader of the IMF come from Europe, it has been the practice ever since the institution was set up after World War Two, while the World Bank has always been led by an American.

French candidates in particular have held the post for almost 40 of the last 70 years. Lagarde’s predecessor, Dominique Strauss-Khan, was forced to resign over a sex scandal in 2011.

The IMF’s first deputy managing director David Lipton told the BBC last year that the next appointment could come from a non-European country and would be “strictly merit-based”.

But Lagarde was praised for winning U.S. Congress approval of a landmark reform program that shifted more voting power to China and other key emerging markets and has generally been considered a skillful, charming negotiator.

Some emerging countries were quick to offer their support.

“I think she has done well in restoring confidence in the leadership after the scandal that plagued the institution,” Philippines finance minister Cesar Purisima told Reuters.

“She is also quite vocal in talking about issues that face the world – vocal but not threatening, which is a very good way to engage countries.”

Dutch finance minister and head of euro zone finance ministers Jeroen Dijsselbloem seemed to sum up the mood in Europe: “Great. Let’s get that done,” he told Reuters TV.

A synchronised swimmer in her youth, Lagarde, the first woman to hold the IMF post, once said in an interview it was that sport which taught her the maxim “grit your teeth and smile” in the man’s world she moves in.

She joined the international law firm Baker & McKenzie in Paris aged 25 after completing a master’s degree in English and labour law, and quickly rose to the top of the Chicago-based firm before entering politics.

As finance minister under former President Nicolas Sarkozy, she attracted criticism early in her tenure by suggesting that the French had become work-shy and that navel-gazing hindered reform.

Born in Paris and raised in the northern port city of Le Havre, Lagarde is a vocal proponent of women as senior executives, once noting dryly that if Lehman Brothers had been Lehman Sisters, it might have survived.

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