Why They Had To Rush to Install Christine Lagarde at the IMF

The world was shocked and horrified by the case of the former head of the IMF,
Dominique Staruss-Kahn and the allegations of rape that emerged in May. Now we
find that the case has since been falling apart.
'Strauss-Kahn case is 'close to collapse' Guardian July 1st 2011
"The prosecution case against Dominique Strauss-Kahn, the former head of
the International Monetary Fund and French presidential hopeful accused of
sexually assaulting a hotel maid, is close to collapse, a report in the New York
Times has claimed.
Well, of course, the job had been done and whatever the real facts of the case, the
incident had to be closed. The objective had been achieved, namely the installation of
Christine Lagarde as the new chief of the IMF.
The play started some time ago, when in 2009, we had this report:
France Says Changing World Requires More Currency Coordination July 5th 2009
Finance Minister Christine Lagarde and Bank of France Governor Christian
Noyer called for increased global coordination of currencies, joining a debate
fanned by emerging markets from China to Russia.
We must explore better coordination of exchange rate policy, Lagarde told
reporters today at a conference in Aix en Provence, France. Noyer said at the
same event that we really need to make sure there is a greater stability
between the big currencies in the period to come.
The French call came three days before leaders of the Group of Eight
countries meet in Italy with counterparts from China and India. Ahead of the
talks, China, India and Russia have pressed for a rethinking of how the
worlds U.S. dollar- dominated currency reserves are composed.
Russian President Dmitry Medvedev has repeatedly called for creation of a
mix of regional reserve currencies as part of the drive to address the crisis,
while questioning the dollars future as a global reserve currency. The
Peoples Bank of China, that countrys central bank, said June 26 that the
International Monetary Fund should manage more of its members
reserves.
Enhancement of the IMF
US Treasury Secretary Geithner gave written testimony to the Senate Foreign
Relations Committee on November 17, 2009, just prior to the UNFCC COP 15 event
in Copenhagen, in which he said:
In the wake of the most severe global recession in decades, strong American
growth will require stronger growth in our trading partners. To establish a
more global foundation for growth and avert future crises of this nature, we
must rebalance global demand.

We asked the International Monetary Fund (IMF) to assist us in a mutual

assessment process by evaluating whether policies pursued by individual G-20
countries are consistent with a more sustainable and balanced trajectory for
the global economy and, if needed, recommending how policies could be
adjusted to improve the global outlook.
The comments on June 29th 2010, from President Barack Obama and Treasury
Secretary Timothy Geithner about the position of the US as a long time driver of the
World Economy were, by an amazing co-incidence, reported on the same day as a
Press Release from the United Nations Department of Economic and Social Affairs,
which stated that The US dollar is an unreliable international currency and
should be replaced by a more stable system.
(See SPPI paper, Changing The Engine Of The Global Economy The Next UN
Strategy, 20 July 2010)
Christine Lagarde is the recent chair of the G20 and will remain a participant as
Managing Director of the IMF.
Jump forward to this year, when on May 14th we had the announcement of StraussKahns arrest on rape charges. However, not quite hitting the headlines, was this
report, some nine days earlier, on May 5th.
Lagarde woos Asia in possible IMF push by Anthony Rowley
Note the date is 5th May, Strauss-Kahn was arrested on May 14th.
His retirement from the IMF post was not due for a further six months, so this
was a strange time to be feeding the media about his replacement.
"G20 chair Christine Lagardes charm offensive in Hanoi has won her
significant Asian support were she to bid for the top job at the IMF,
influential sources suggested to Emerging Markets.
French finance minister Christine Lagarde has garnered considerable support
from Asian finance ministers and others at the ADB annual meeting in Hanoi
for what could be a bid to become the next managing director of the IMF.
Lagarde has been rumoured to be among possible candidates for the IMF
job. And the respect she has gained on what some see as a support-canvassing
trip to Asia a region that has long pushed to nominate its own candidate
could strengthen her chances, should she run.
Asian Development Bank president Haruhiko Kuroda suggested to Emerging
Markets that Lagarde would be a perfect candidate. Kuroda had himself
been seen as a possible successor to current IMF managing director
Dominique Strauss-Kahn, but has recently expressed a desire to stay on as
president of the ADB when his current five-year term ends in November.

The issue is drawing attention because Strauss-Kahn could quit his post in
the coming months and return to France, to seek nomination as Socialist
candidate in the presidential election due to be held early next year."
Very prescient.
On May 11th 2011, out of the Lagarde woodwork came this report from France:
Christine Lagarde under investigation over role in payments to Bernard Tapie - The
Guardian Wednesday 11 May 2011.
Strauss-Kahn was arrested only three days later, on the 14th May, 2011. The French
investigation would have been very problematic for Lagarde, but with the StraussKahn incident, it disappeared totally from the radar.
If things had taken their natural course, there would have been no guarantee of her
getting the IMF job in November when Strauss-Kahn was due to retire from the
position, in fact it is likely she would have not been appointed with a scandal
surrounding her.
"The French finance minister is to be the subject of a full judicial inquiry after
Tapie received 248m to end 15-year legal dispute.
Lagarde, once a lawyer in Chicago, (and Paris), has become embroiled in the
soap-opera saga of Bernard Tapie, one of the most flamboyant and
controversial figures in French public life.
Tapie is a maverick rags-to-riches tycoon whose CV includes a stint as head of
Marseille football club, head of the Adidas sports empire, left-wing urban
affairs minister under Francois Mitterrand, a seven-month jail term for
match-fixing, a conviction for tax fraud and an amazing public comeback as
an actor, singer, chat show host and supporter of French president Nicolas
Sarkozy.
For almost two decades, a battle raged through the courts after Tapie claimed
he was cheated by the Credit Lyonnais bank which handled the 1993 sale of
Adidas. Credit Lyonnais, once publicly owned, had been wound up and its
liabilities taken over by a state-operated consortium.
In 2007, Lagarde intervened and ended the court dispute by ordering a special
panel of judges to arbitrate. In 2008, they ruled that Tapie should receive
285m (248m) in damages. The out-of-court settlement scandalised
opposition politicians. The centrist Francois Bayrou said it was "unthinkable
that the state dips into the taxpayers' pocket for a private beneficiary". At the
time, Lagarde tried to calm the row, saying that, after tax and debt payments,
Tapie would only pocket about 30m. Later reports suggested he kept about
200m."

We then had the Strauss-Kahn media feeding frenzy, in amongst which we had this
report in the UK Telegraph, Christine Lagarde seen as 'shoo-in' to replace Dominique
Strauss-Kahn at IMF May 23rd 2011

The French finance minister has emerged as the runaway favourite to become
the first woman to lead an organisation looking to quickly repair the damage
caused by the resignation of Dominique Strauss-Kahn.
She then went on a whirlwind tour of developing nations:
Promises, promises
Lagarde visits Brazil On Campaign For IMF Chief May 31st 2011
Speaking in Brasilia on May 30, Lagarde pledged that if she is selected to be
the next IMF managing director, she will back reforms that would give
Brazil and other emerging economies more influence at the multilateral
institution.
Lagarde visits India to campaign for IMF top job June 7th 2011
Developing nations such as India, Brazil and China have been pushing for
a bigger say in the running of the IMF and World Bank to reflect their
growing economic clout.
Lagarde visits China to gather support for IMF top job BBC June 9th 2011
Christine Lagarde, the top candidate to lead the International Monetary Fund,
has said she is "very satisfied" with her meeting with Chinese officials.
The French finance minister is in Beijing as part of a tour to garner support for
her candidacy. "I have a very positive feeling following these talks, but it's up
to them to convey their decision," Ms Lagarde said in an interview with the
AFP news agency.
She said it would be "very legitimate for Chinese representatives to be
included at the highest level of the Fund's leadership".
Beijing expressed a wish for "better representation", she said.
Russia to back Lagarde as IMF chief June 28th
Russia will support Christine Lagardes bid for top position at the IMF,
Russian Finance Minister and Deputy Prime Minister Aleksey Kudrin has
said. The Lagarde proposal fully complies with the IMF's aims. She will be
able to bring dynamism to this key international organization, and ensure its
further reform, taking the interests of states with developing markets into
account."
Christine Lagarde took up her new duties on Tuesday, July 5 th. Her contract says, As
managing director, you are expected to observe the highest standards of ethical

conduct, consistent with the values of integrity, impartiality and discretion, You
shall strive to avoid even the appearance of impropriety in your conduct.
The report makes the point that, The requirements on ethics did not appear in the
contract of her predecessor, Dominique Strauss-Khan, who resigned in May after
being charged with sexual assault. It could just as easily apply to the Bernard Tapie
case.
China expresses 'support for Lagarde IMF bid' June 27th 2011
China's central bank head voiced support Monday for Christine Lagarde's bid to
lead the IMF, Dow Jones Newswires said, in the country's first public statement on the
issue.
Christine Lagarde took up her new duties on Tuesday, July 5th
Promises redeemed
China secures one of IMF four Deputy Managing Director posts July 12th 2011
China has secured its first top-level post at the International Monetary Fund
(IMF) in recognition of its growing power in the global economy. New IMF
Managing Director Christine Lagarde appointed Zhu Min to a newly created
deputy managing director post.
Last week, Ms Lagarde said she would go ahead with reforms to give
emerging markets greater sway at the lender. She also said White House aide
David Lipton would succeed John Lipsky as her top deputy at the end of
August.
Mr Zhu is a former deputy governor of the People's Bank of China and has
been a special adviser to the IMF for the past year.
Min Zhu brings a wealth of experience in government, international policy
making and financial markets, strong managerial and communication skills as
well as an institutional understanding of the Fund, and I look forward to his
counsel, Ms Lagarde said.
Lagarde is also a member of Ban Ki Moon's High Level Climate Finance Panel with
the UK Minister for Climate Change, Chris Huhne, Lord Stern, of IdeaCarbon,
International hedge fund operator, George Soros, Ciao Koch-Weser of Deutsche Bank
and others, looking to pull in $100 billion a year from the industrialised nations for
the Copenhagen Climate Fund, the mechanism for transferring wealth from the west
to developing nations, such as India, China and Brazil. It would be useful if a panel
member were to be head of the IMF, particularly one who has already promised so
much to her new global constituency.
The side-lined story hits the news again
By Peter Allen in Paris 04 Aug 2011
IMF chief Christine Lagarde facing sleaze investigation

Christine Lagarde, the head of the International Monetary Fund, is to

be investigated by French courts for authorising a 270 million payout
to a prominent Nicolas Sarkozy supporter when she was finance
minister.
It comes after Dominque Strauss-Kahn, another senior French
politician, was sacked as IMF chief following allegations that he raped
a chambermaid in a New York hotel earlier this year.
Ms Lagarde began campaigning to succeed Mr Strauss-Kahn soon
after his arrest for a crime which could still land him 25 years in
prison. (but highly unlikely)
A false perception
The statement above is absolutely incorrect, as shown above, it was almost
two weeks earlier that she began visiting Asia on the campaign trail and she
had been making relevant noises two years previously.
But now it is Ms Lagarde, a lawyer and retired synchronised
swimming star, who is facing a criminal trial of her own, as well as a
possible jail sentence.
Opposition MPs were furious, with former presidential candidate
Francois Bayrou accusing Ms Lagarde of "dipping into the taxpayers'
pocket for a private beneficiary."
Mr Strauss-Kahn's Socialist Party also accused Ms Lagarde of
improper conduct, pointing to the fact that Mr Tapie was a vocal
supporter of President Nicolas Sarkozy's ruling UMP.
Ms Lagarde's lawyer, Yves Repiquet, said the inquiry was "in no
way incompatible" with her new job, and expected the case to be
dismissed.
With this waiting in the wings, there is no way she would have got her new job
without the Strauss-Kahn affair. Quite obviously the global elite wanted a fellow
traveller in charge at the IMF, rather than the maverick womaniser Strauss-Kahn,
whose known pecadillos were an easy option to oust him early, to accommodate Ms
Lagarde.