Bland Lagarde will escape the Bretton Woods curse
By Christopher Swann
The author is a Reuters Breakingviews columnist. The opinions expressed are his own.
Christine Lagarde may soon reap the benefits of being bland. The IMF chief is under investigation for signing off on a 403 million euro ($531 million) payout to a French tycoon when she served as the country’s finance minister. Dominique Strauss-Kahn, her predecessor at the Washington-based lender, and former World Bank President Paul Wolfowitz were both ousted for misconduct. Lagarde, though, has few enemies.
Her squeaky-clean appearance was part of her appeal when she was chosen to replace DSK in 2011. He had been accused of sexually assaulting a maid in a New York hotel. While those allegations never made it to court, the incident was a stain on the IMF’s reputation. That his successor is now embroiled in a potential scandal from six years ago is starting to make the top jobs at these supranational institutions look cursed.
It needn’t be fatal. Lagarde is accused of neglect, not active wrongdoing. The case revolves around a 403 million euro award granted in 2008 to businessman Bernard Tapie. He had alleged he had been defrauded by now-defunct state-controlled bank Crédit Lyonnais when it purchased his sports firm Adidas in 1993. Tapie was a vocal supporter of then-President Nicolas Sarkozy, so investigators are trying to determine whether the process was politically rigged.
Lagarde appears to have rubber-stamped the payment. Such relatively modest charges might be sufficient to dislodge an unpopular chief. Wolfowitz was given the boot from the World Bank for a potentially forgivable conflict of interest: approving a generous financial package for a girlfriend who worked at the lender and who had to be reassigned when he got the job. But he was already intensely disliked at the bank for his role as a leading architect of the second Iraq war when he served as George W. Bush’s Deputy Secretary of Defense. His apparent obsession with combating corruption rather than fighting poverty earned him more enemies at the bank.
By contrast, the scrupulously diplomatic Lagarde is an emollient manager – acceptable to both top brass at the fund and its biggest donor countries. Nor have Lagarde’s middle-of-the-road economic views caused offense. Unless the Tapie investigation takes an unexpected and nasty turn, these rather dull qualities ought to be her saving grace.