IMF Credibility Takes Hit After Managing Director Found Guilty of Criminal Negligence
Economist James Henry says the ruling is a slap on the wrist for Lagarde, who is now the third director in a row convicted of a crime
SHARMINI PERIES: Welcome to The Real News Network. I’m Sharmini Peries, coming to you from Baltimore. International Monetary Fund’s Managing Director, Christine Legarde has been found guilty in France for criminal negligence in connection with her time as France’s Finance Minister in 2008.
The judge said that she does not face jail time or a fine, but analysts say that her IMF job might be on the line. Her conviction has to do with a case in which she awarded arbitration for a corruption case in which French State ended up losing $420 million.
Joining us now from New York to talk about Lagarde’s conviction is James Henry. James is a leading economist, attorney and investigative journalist. He’s a Senior Advisor to the Tax Justice Network and a Senior Fellow at Columbia University. Thanks for joining us, James.
JAMES HENRY: You’re very welcome.
SHARMINI PERIES: So, James, the presiding judge in Lagarde’s case decided her good reputation as reason for not issuing a fine or a prison punishment. What is your reaction to that?
JAMES HENRY: Yeah, well, this is kind of a slap on the wrist. I mean, in fact, it’s the third IMF Director in a row that we’ve seen subject to a kind of criminal prosecution. We have a case of Dominique Strauss-Kahn, her predecessor, and then the case of Rodrigo Rato in Spain. You know, this is turning out to be kind of a carnival of errors.
Regardless of the merits of this particular case, I think we have to get to a situation where we have really outstanding economists — not lawyers who’ve been involved in practicing for major law firms for, you know, in her case more than 20 years at Baker McKenzie, one of the largest global law firms. It seems to me that there’s a real, you know… the situation kind of cries out for people who are really trained to handle the kind of macro-economic issues, the tax policy issues, the financial institution issues and the developing country issues that have always been in the IMF’s domain. You know, she’s had a mixed track record, I think — a lot of criticism of the IMF’s role in the Greek bail-out. You know, the IMF didn’t succeed in getting a kind of debt-forgiveness plan for Greece, and Greece has been stuck in a very low-growth kind of austerity mode since, you know, 2011. That’s just one example.
So, you know, I think it’s the IMF’s role, its job is really a gigantic one and it’s hard to fault anyone that much. But in her case, I think she came to this, you know, as a tax lawyer, without, you know, enormous amount of experience in development economics. And I think it shows.
SHARMINI PERIES: And what do you think will happen in terms of her position at the IMF? Do you think she’ll be able to stay there?
JAMES HENRY: Oh ,she’s been given no fine, no jail term and no criminal record as a result of this. So, it’s kind of a slap on the wrist. I guess that means she won’t be disbarred but, you know, whether the IMF, as an institution, is going to be able to have any kind of credibility at all if it has, you know, its senior official — who’s supposed to be among other things, involved in policing financial secrecy and making the international financial system stable and transparent — whether they can tolerate someone who’s been convicted now of a financial crime, you know, to hold that office, I think, is really in doubt.
SHARMINI PERIES: All right, James, I thank you so much for joining us today.
JAMES HENRY: Thanks very much.
SHARMINI PERIES: And thank you for joining us on The Real News Network.