“After three years of procedure, the sole surviving allegation is that through inadvertency or inattention I may have failed to intervene to block the arbitration that brought to an end the long-standing Tapie litigation,” Christine Lagarde, head of the IMF and former French Finance Minister

“I don’t know Ms. Lagarde and don’t know for sure whether she is innocent of this allegation, but I would bet that she is. The allegation makes no sense to me. As I understand it, they are alleging that it was improper for her to refer a State legal matter to arbitration (because the outcome of that arbitration cost the State several hundred million dollars)? This is what happens in Europe all the time, because the laws and regulations are statutory-based rather than common law-based. French law (like U.S. statutory law) is voluminous, complicated and unclear, and that allows arbitrary enforcement/justice. Largely unaccountable French government investigators/prosecutors (who are trying to make a name for themselves or who may be wrong-headed zealots) continually investigate and prosecute mostly out-of-power politicians and business executives for violating some arcane or arbitrary law or regulation. Do we really want this type liberty-stifling legal system in the U.S.? The U.S. statutory legal and regulatory system is heading that direction and fast. These days, U.S. Federal bureaucracies (e.g. the SEC, FDIC, CFPB, the Federal Reserve, etc.) have awesome, arbitrary, and largely unaccountable power and use it to aggressively pursue businesses and business people primarily through coerced civil settlements (that sidestep the courts, because of the time, cost, and reputational issues of litigating). Even the recent criminal indictment of Texas Governor Rick Perry sure makes it seem like we are losing our common sense and historical common law legal system (the objective “Rule of Law”), in favor of a European-style statutory legal system. This is a system that destroys individual liberty and stifles economic activity. If our politicians and judiciary read Noble Laureate Hayek and understood his thoughts on how important the Rule of Law is for liberty and economic activity, we might have some hope of stopping (and reversing) the erosion of our common law system with a European-style statutory system. Unfortunately, I don’t see that happening anytime soon. If someone like Ms. Lagarde: well-educated, smart and well-intended, can find themselves unwittingly in violation of (or at least investigated for) some arcane or unclear legal code that is pretty scary for France and the average French citizen. Hayek would say it happened because France abandoned (or never really had because of Napoleonic law) The Rule of Law to seek “retroactive”, arbitrary justice. He would argue this is how governments become totalitarian and government officials become tyrants to their fellow citizens.”, Mike Perry, former Chairman and CEO, IndyMac Bank

“If, however, the law is to enable authorities to direct economic life, it must give them powers to make and enforce decisions in circumstances which cannot be foreseen and on principles which cannot be stated in generic form. The consequence is that, as planning extends, the delegation of legislative powers to diverse boards and authorities becomes increasingly common…Constantly the broadest powers are conferred on new authorities which, without being bound by fixed rules, have almost unlimited discretion in regulating this or that activity of the people.”, Nobel Laureate, F.A. Hayek, “The Road to Serfdom”

Europe News

IMF Head Is Targeted in French Probe

By William Horobin

PARIS—A French court put Christine Lagarde, head of the International Monetary Fund, under formal investigation for negligence in a corruption probe dating back to her days as France’s finance minister.

Ms. Lagarde confirmed the court’s decision in a statement Wednesday and said the move was “without merit.” She added that she had instructed her lawyer to appeal.

The investigation is a political embarrassment and risks being a distraction for Ms. Lagarde while she marshals world leaders to repair their economies. Christopher Baker, one of her lawyers, said the probe wouldn’t deter her. “She has no intention of resigning,” he said.

Ms. Lagarde hasn’t formally been charged. Under French law, being placed under formal investigation, is synonymous with a preliminary charge for negligence, which carries maximum penalties of €15,000 ($19,800) and one year in prison. When magistrates wrap up their probe, they can press charges and send her to trial or drop the case.

Ms. Lagarde, who has repeatedly denied any wrongdoing, said she was heading back to Washington on Wednesday. An IMF spokesman said that she planned to brief the fund’s board upon her return and declined to comment further.

The decision by the Cour de Justice de la République, a court set up to examine alleged wrongdoings by government ministers while in office, was a surprise since magistrates had decided in May 2013—after a nearly 10-month preliminary probe—not to regard Ms. Lagarde as a suspect.

The court is looking into the role Ms. Lagarde played in the resolution of a two-decade-old melodrama known in France as “L’Affaire Tapie.” The affair has pitted Bernard Tapie, a French entrepreneur and former politician, against the French state.

The court is focusing on Ms. Lagarde’s decision, soon after she became finance minister in 2007, to refer the dispute to an arbitration panel. In 2008, the panel awarded Mr. Tapie more than €400 million ($527 million) in compensation.

The court initially looked into whether Ms. Lagarde had abused her authority in referring the dispute to arbitration, rather than allowing it to continue in the courts. In May 2013, though, magistrates said Ms. Lagarde was only a material witness in the probe. That status was upheld again in March of this year.

It isn’t clear what led the court to change Ms. Lagarde’s status to suspect from witness.

“After three years of procedure, the sole surviving allegation is that through inadvertency or inattention I may have failed to intervene to block the arbitration that brought to an end the long-standing Tapie litigation,” Ms. Lagarde said in her statement on Wednesday.


Posted on August 28, 2014, in Postings. Bookmark the permalink. Leave a comment.

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