The managing director of the International Monetary Fund (IMF) Christine Lagarde lied to judges when she was questioned in May about her involvement in the Tapie affair, Mediapart can reveal. Mediapart has seen all the answers given by Lagarde to the judges of the Cour de justice de la République (CJR) to justify her role in the controversial state-backed arbitration award in 2008 of 404 million euros in favour of the colourful businessman Bernard Tapie.
Two of her answers show a clear conflict between what she told the court and what she had told French MPs back in 2008 when justifying the arbitration payout as minister of finance under President Sarkozy. The replies, given during two days of questioning on May 23rd and May 24th, also suggest that she misled judges about her whereabouts when a key letter was written in October 2007 that removed any final obstacles to the arbitration process taking place.
More generally, the IMF boss's constant claims before the CJR that she was unaware of the content of key documents at the time of the arbitration process, as well as the confused nature of some of her answers, raise question marks about just what she was doing during this key episode at the start of President Sarkozy's presidency.
The former minister’s first lie relates to the Agence des participations de l’État (APE), the body whose job it is to ensure the state gets maximum value from its stakes in any businesses. Lagarde, who is being treated as an 'assisted witness' in the investigation, told the judges on numerous occasions that she had not been aware of notes that the APE had sent to her regarding the arbitration affair.
These memos first of all warned about agreeing to an arbitration process and the risk of illegality in the process, then after the award had been made they drew her attention to the possibility of an appeal. “I want to make clear, following your question, that I have discovered, after the event, a certain number of memos from the APE which had not been brought to my attention, or that I did not have at that time,” she said.
However, the judges persisted and observed that the head of APE at the time Bruno Bézard – today the director general of public finances – had written a note on January 9th, 2007, setting out that body's point of view. It made clear that in the ongoing judicial saga between Tapie and the state-owned CDR, the state was in a strong legal position after a judgement by the court of appeal the Cour de cassation. Lagarde told them: “I was not aware, at the time I took office, of the memo of January 9th, 2007 from APE.”
The judges then referred to another letter from Bézard, this one dated August 1st, 2007, in which he formally told the minister: “I can thus only advise the minister against the arbitration route, which is justified neither from the state's nor the CDR's point of view.” Why had the minister not paid attention to the head of a state body that knew the case better? “As I indicated previously, I had no knowledge of this memo at the time it was drawn up. I cannot therefore reply to that question,” Lagarde told the judges.
It would seem from her replies to the judges, therefore, that Lagarde did not read any of the memos setting out the APE's formal position, even though this was a controversial case. Yet, though the judges did not press her on this, this position poses a problem for the head of the IMF. For it contradicts what she had told members of the National Assembly's finance committee on September 23rd 2008 during their own investigation into the Tapie affair. Having informed MPs that the APE was “regularly consulted” on such issues, she added: “It sent me memos right throughout the case. In general they involved relevant analysis that was often conservative in its view of how well-founded was such or such a step; in particular it engaged in an analysis of the legal consultations that had been provided.” Lagarde told the MPs: “I took notice of their recommendations with interest and I compared them with the other opinions that were sent to me.”
So while Lagarde told the judges she had no knowledge of the memos from APE, or at least not until afterwards, the IMF boss told MPs nearly five years ago that she had “taken notice of them with interest”. Clearly Lagarde is lying on one of these occasions; but whether to the MPs or to the judges one does not know.
The former minister’s capacity to mislead is also shown later during her questioning when the judges refer to a letter that Christine Lagarde wrote on October 23rd 2007 to the head of the public body, the Établissement public de financement et de restructuration (EPFR), which oversees the CDR. This is an important letter for up to this point the CDR had hoped that, based on an old contractual clause, it would get Crédit lyonnais to agree in writing to compensate it to the tune of 12 million euros. Crédit lyonnais's refusal to do so had blocked the use of arbitration. In Lagarde's letter she stipulated that obtaining this guarantee was no longer a prior condition to going to arbitration. It was this letter, therefore, that gave the arbitration process the green light.
Just where was the minister on October 23rd 2007?
However, Christine Lagarde told the judges that she was not responsible for this letter, suggesting that her then chief of staff Stéphane Richard – now boss of telecommunications giant Orange and himself under investigation for conspiracy to defraud in relation to the Tapie case – had perhaps used her ministerial 'signature stamp' to send it. “The letter that you have just reminded me of poses me a real problem,” Lagarde told the judges. “I don't think that I would have signed a letter of this nature if I had been in a position to read it over. I would add that it is clearly not a letter drafted by APE and that it was probably written during my absence from Paris in as much as its date corresponds to the time of the general assembly of the IMF in which I took part in my capacity as minister.”
Lagarde continued: “In this respect I undertake to find and send to you a document that confirms what I'm saying. In addition I note that this letter of October 23rd, 2007, bears a signature that has used the 'signature stamp'. At your request I make clear that the signature stamp could only be used with the prior agreement of the chief-of-staff [of the ministerial office] or their deputy, on the one hand, and of the director of the office on the other.”
When this revelation was leaked recently, it was suggested in several newspapers that Lagarde had been deceived by chief-of-staff Stéphane Richard and the head of the CDR at the time, Jean-François Rocchi. However, this interpretation is open to question, for it is not hard to establish that the ex-minister's comments are not reliable.
For it turns out that on Tuesday October 23rd, 2007, Christine Lagarde was not in Washington for the IMF general assembly but was instead in Paris. It is not hard to establish her movements through media reports of that day. In the morning she gave an interview to France Inter radio about consumer spending power, then later presided over a conference on employment at the ministry of finance. A press release also indicates that at midday the minister had taken part in a press conference with two other ministers.
So it is clear that Lagarde misled the judges over the date. But on the substance of the issue Lagarde's reply was equally astonishing. For a look back at what the then minister told MPs in September 2008 reveals that not only does Lagarde talk about that 2007 letter – she claims ownership of it. “I willingly confirm having given instructions [to the managers at EPFR] that they support the decision of the CDR to go to arbitration. I have never hidden that, I take responsibility for the written instructions that I gave on that occasion...”
Once again Christine Lagarde has clearly lied about this; either to the judges in 2013 or to MPs in 2008.
'Not easy reading'
Lagarde also constantly repeated that she had been unaware of information at key moments during the arbitration saga. For example, the judges questioned her about a press release issued in her name on July 11th, 2008, to announce the result of the arbitration process. The release stated that the procedure had been carried out by three “unimpeachable” arbiters who had put a “definitive end” to the 15 year legal dispute between Tapie and the now defunct state-owned bank Crédit lyonnais bank whose interests had been taken over by the state, and that “the greater part” of the award would go back to the state either to repay debts or in the form of taxes.
The press release seems astonishing today, give that one of the three “unimpeachable” arbitration judges Pierre Estoup is now under formal investigation over “conspiracy to defraud” in relation to the affair. Why, too, did the finance ministry suggest – incorrectly – that Tapie himself would get so little from the award, or that there was not even any consideration that the award could be reviewed? Lagarde's astonishing answer to the judges was: “This press release was not submitted to me before its publication.”
Another example involves the APE. On July 23rd, 2008, just over two weeks after the arbitration award, this organisation wrote to Lagarde about whether the Consortium de réalisation (CDR) – the state body that took over Crédit lyonnais's interest after it collapsed – should appeal against the arbitration outcome. The APE pointed out that while one expert lawyer consulted on the verdict had said an appeal had little hope, another, Benoît Soltner, had said the opposite and in forthright terms. In conclusion, said the APE, the CDR could be considered to have “serious” grounds for fighting the award.
The judges therefore pressed Christine Lagarde on why she had not sided with the APE's view. She replied: “I had been given multiple and varied opinions. [The lawyer] Soltner, in the second of the opinions that he provided, expressed a view more favourable to the annulling [of the award] but his written [opinion] was not easy reading. In those circumstances the second opinion was not enough for me to go back on my initial position which did not lean towards an annulment.”
On July 28th, 2008, a few days after the APE letter was sent, the ministry of finance had published another press release. It said that having taken legal advice “which considered that the chances of an appeal's success was poor” and noting that the parties involved had agreed to “renounce” their right to appeal in the process, Christine Lagarde was formally asking the state bodies concerned to back the decision not to seek an appeal. This statement dominated the news that evening. The release, however, was a lie. For as Mediapart has made clear, while two lawyers consulted by the state had been in favour of no appeal, two others, including Benoît Soltner, had been in favour.
The judges, therefore, asked Lagarde how such a press release could have been issued in her name. She replied: “I did not have personal knowledge of the content of this press release before it was made public.”
An even more astonishing episode involves the emergence, some weeks after that press release, of the first doubts about the declarations of independence involving one of the arbitration judges Pierre Estoup. This is a crucial matter because it shows that as early as the autumn of 2008 the then minister of finance was aware of problems that could have led to the arbitration award being appealed against and eventually annulled; potentially saving the taxpayers 403 million euros. On the 3rd and 13th, November 2013, the CDR held meetings to decide its course of action.
However, according to Lagarde's testimony this issue was not a pressing one. “During the almost daily meetings with the head of my ministerial office, he quickly talked about a problem relating to the third arbitration judge, Monsieur Estoup,” she told the judges. “He indicated to me that the necessary consultations had been made and that the problem had been sorted. At that time I did not pay particular attention to this problem. Today I obviously realise that it would have been preferable if I had taken more of an interest in it.”
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English version by Michael Streeter