The special court she is facing, the Cour de Justice de la République (CJR), is noted for its goodwill while the court's prosecutor Jean-Claude Marin is likely to ask for her to be found not guilty, having already stated she should not be facing trial at all. Nonetheless Christine Lagarde, currently managing director of the International Monetary Fund, is not in an comfortable situation. That was why from the beginning of her trial yesterday, Monday December 12th, the former French minister of the economy went to great pains to convince the three judges and twelve Parliamentarians who are trying her case that she was neither casual nor negligent in her handling of an arbitration panel that awarded French tycoon Bernard Tapie 403 million euros in 2008. Yet the charges against her are serious.
Lagarde is being tried in relation to “the misappropriation of public funds committed by a third party and resulting from the negligence” of a person in public office. If found guilty she risks a year's imprisonment and a fine of 15,000 euros under article 432-16 of the French criminal code. “Have we been exploited? I want to know. Have I been negligent? No,” insisted Lagarde at the outset of the trial, in a preliminary declaration in which she defended her honour and her reputation.
Enlargement : Illustration 1
The former minister said she was “shocked” by the legal judgement that accompanied the decision by investigating judges to send her for trial before the CJR, the only court which can try former French government ministers in relation to acts they carried out while in office. Lagarde said she had read “truncated” arguments, some “approximations” and even discerned some “aggressivity”, an “imaginary conspiracy theory” and “disdain for the separation of powers”. She was then put in her place by court president Martibne Ract-Madoux, who reminded the former minister that it was not yet the time for pleading one's case. It was also pointed out that while the IMF boss had indeed explained how she had lifted her own diplomatic immunity so she could appear in court, and how she was very anxious to speak – despite her lawyers' failed bid to get the proceedings stayed – it was not down to her to conduct the courtroom debates.
Faced with the accusations made by the investigating magistrates about her behaviour over the arbitration, Christine Lagarde was keen to convince the court that, at the time, she had other priorities to consider while serving in newly-elected President Nicolas Sarkozy's government. From the moment she arrived at the Ministry of the Economy in June 2007 – she had replaced Jean-Louis Borloo who had become environment minister – the “economic and financial crisis started to blow across out country”, she explained. “I largely devoted myself to international and macro-economic matters,” she continued. It was her chief of staff Stéphane Richard, whom she inherited from Borloo, who most often managed national and micro-economic cases. Lagarde says that at the time she was unaware that Jean-Louis Borloo, Stéphane Richard – who is now chief executive and chairman of French telecom giant Orange – and President Sarkozy all had personal links with Bernard Tapie. Having lived a long time in Chicago, she was also not aware of the complex Adidas affair that lay behind Tapie's demand for compensation.
The minister of the economy had not read a memo that was unfavourable to the setting up of an arbitration panel to adjudicate between Tapie and the bank Crédit Lyonnais because she was between two official trips between the United States and Morocco. On other occasions she was in Brussels. Nor had she read the investigative weekly Le Canard Enchaîné, which had at the time got wind of how events were moving in Tapie's favour; under the new Sarkozy government trusted figures had been put at the head of the state bodies that managed the liabilities of Crédit Lyonnais after its near-bankruptcy in 1993, and a key lawyer on one of those bodies had been replaced.
Lagarde explained to the court that she was at the head of a “gigantic ministry to which one had added [responsibility for] employment, which had never happened before”. Some very weighty legislation was being put through at the time. She received, she said, “3,000 to 4,000 memos a year from the Treasury. With the other departments in the ministry I was receiving 8,000 to 9,000 memos a year. I could not read them all, the office was there to filter them,” said Lagarde.
The snag in her argument is that Christne Lagarde was a commercial lawyer who had already been involved in arbitration processes and who had, moreover, ignored all the red flags and alerts that were being passed up to her about the risks of a deal in Tapie's favour, notably from the body that manages state holdings in firms the Agence des Participations de l'État (APE).
Lagarde had also interpreted a ruling from the top appeal court the Cour de Cassation as meaning that the liquidators of Bernard Tapie's group could seek damages from the resale of Adidas, something which was categorically disputed by the investigating judges in this case. This string of oversights eventually cost the French taxpayer some 403 million euros, of which 45 million euros were handed to the Tapie family to compensate for “psychological damage”.
Christine Lagarde also said that she was unaware that a meeting had been organised at the Elysée between Sarkozy's chief of staff Claude Guéant, senior presidential aides François Pérol and Patrick Ouart, Stéphane Richard and Jean-François Rocchi, who was then head of the Consortium de réalisation (CDR), the state body that managed the liabilities of Crédit Lyonnais. The meeting had taken place in the presence of Bernard Tapie, who had just come from a meeting with President Sarkozy.
To defend herself, and in order not to come across as naïve or incompetent, Christine Lagarde hinted that her chief of staff, Stéphane Richard, knew much more than her at the time about the Tapie arbitration process. Richard is due to give evidence in the case on Wednesday. He has himself been placed under formal investigation in the affair, along with Bernard Tapie and others, and a decision is expected soon as to whether they will stand trial or not.
Christine Lagarde denies any wrongdoing and the case, which is expected to end on December 20th, continues.
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The French version of this article can be found here.
English version by Michael Streeter