Update: The IMF says in a statement following the Lagarde news that its board will meet shortly to consider the conviction.
“The executive board has met on previous occasions to consider developments related to the legal proceedings in France,” IMF spokesman Gerry Rice says in e-mail, and adds that “It is expected that the board will meet again shortly to consider the most recent developments”:
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International Monetary Fund Managing Director Christine Lagarde was found guilty of one count of negligence by a French court today, according to Bloomberg News. She was accused of failing to prevent a massive government payout to businessman Bernard Tapie eight years ago, while serving as France’s finance minister, but most surprising, she will face no fine or jail sentence.
Ms. Lagarde was on trial on allegations of negligence stemming from her role nearly 10 years ago settling a dispute between the French state and business tycoon Bernard Tapie. The verdict is a blow to the IMF chief who had said Friday that the trial would end a five-year “ordeal” for her family and former colleagues.
The conviction places both Ms. Lagarde and the IMF in a bind after the fund approved a second term for her as managing director earlier this year. However, it doesn’t necessarily mean the IMF will have to eject Ms. Lagarde from her post, where she has won broad international support among both the fund’s largest shareholders, and its smaller members.
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Some more details from Bloomberg:
International Monetary Fund chief Christine Lagarde convicted of one count of negligence by Paris court over her handling of a multi-million dispute when she was France’s finance minister.
- 60-year-old IMF managing director convicted at the Cour de Justice de la Republique, over events that occurred nearly a decade ago
- Lagarde won’t face fine or jail sentence, judge says
- Lagarde was negligent in 2008 decision not to appeal arbitration, judge says
- Lagarde decided in mid-2008 not to appeal a 285 million-euro ($303-million) arbitration award for businessman Bernard Tapie that led to a massive government payout
- Lagarde was cleared of second count related to her 2007 decision to take Tapie dispute to arbitration
- Case stems from former state-owned bank Credit Lyonnais’s disagreement with Tapie over the 1993 sale of Adidas AG, which he owned
The IMF has just issued a brief statement:
- *IMF BOARD TO MEET SHORTLY TO DISCUSS LAGARDE TRIAL DEVELOPMENTS
Of course, this wouldn’t be the first time that an IMF head has been “sacrificed” for the greater good: recall the impressive framing of Lagarde’s predecessor Dominique Strauss-Khan, who from frontrunning French presidential candidate, suffered a political and career trainwreck overnight when he allegedly raped a maid at a NYC hotel.