Despite Christine Lagarde's conviction earlier on Monday for failing to overturn a 285-million euro payout to a businessman in an arbitration case while she was France’s finance minister nearly a decade ago - a verdict for which the 60-year-old IMF chief won’t face a fine or prison term - the Executive Board of the International Monetary Board decided that her transgression was not too extensive, and reaffirmed its full confidence in Lagarde, indicating support for her to remain managing director of the lender despite being convicted of negligence by a French court.
"The Executive Board took all relevant factors into account in its discussions, including the Managing Director's outstanding leadership of the Fund and the wide respect and trust for her leadership globally," the executive board said in a statement. "In this context, the Executive Board reaffirms its full confidence in the Managing Director’s ability to continue to effectively carry out her duties."
"The Executive Board looks forward to continuing to work with the Managing Director to address the difficult challenges facing the global economy."
As if nothing happened.
Ironically, according to her terms of appointment, Lagarde must strive to avoid “even the appearance of impropriety”, such as what happened today. She can be terminated at any time by the 24-member executive board, which represents the IMF’s 189 member nations. Still, the board has maintained confidence in her since it was announced a year ago that she would face trial in France.
Lagarde was reappointed for her second five-year term this year when no challengers emerged. She became the first woman to run the Washington-based fund, after its previous head, Dominique Strauss-Khan was embroiled in a sexual scandal involving a hotel maid in New York City.
The IMF statement was unambiguous in its praise. “The Executive Board took all relevant factors into account in its discussions, including the Managing Director’s outstanding leadership of the Fund and the wide respect and trust for her leadership globally,” according to the statement.
As Bloomberg adds, other officials jumped to Lagarde’s defense: U.S. Treasury Secretary Jacob Lew reaffirmed his “full support” for Lagarde in a statement, calling her a “strong leader” during a critical time for the world economy. France’s Finance Ministry published a statement expressing “full confidence” in the IMF chief.
Lagarde is the third straight IMF managing director to run into legal issues. Her predecessor Dominique Strauss-Kahn resigned after a hotel maid accused him of sexual assault. Prosecutors dropped a criminal case amid inconsistencies in her testimony, and Strauss-Kahn reached an undisclosed civil settlement with the woman. Last year, he was acquitted in France of charges of aggravated pimping in connection with a string of sex parties.
Rodrigo Rato, who preceded DSK at the IMF, has been accused in Spain of misusing credit cards during his time at Bankia SA. Rato has denied acting inappropriately.
But perhaps the biggest factor influecing the board's decision was the risk of having to pick a new head at a time of turbulent political upheaval in the US. In backing Lagarde, Bloomberg wrote, the fund’s executive board avoids the task of having to select a new managing director as the U.S. transitions to a new administration under Donald Trump. One of Trump’s finalists for secretary of state, John Bolton, wrote in a recent opinion piece that the world should think creatively about how to reform the IMF, and consider privatizing development lenders such as the World Bank.