Saturday, 24 December 2016 09:25

Tapie Affair Lagarde Escape Renews New Zealander John Key prospects at IMF

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L’Affaire Tapie now engulfing Francis Fillon campaign


IMF managing director Christine Lagarde’s exit from the Paris court room with only the charge of “negligence” attached to her has served only to intensify the anger in France over the porosity between their country’s judiciary and it politicians, writes our European correspondent.

The gathering storm is of interest to New Zealand because of a widespread impression that former prime minister John Key is in line to succeed her as chief of the International Monetary Fund, an economic stabilising agency that had its origins in Bretton Woods.

The possibility initially arose when Mr Key was still serving as prime minister and Miss Lagarde’s five year tenure came up for renewal amid the re-convening of a high level investigation into what is known as the Tapie Affair.

In the event Miss Lagarde toughed it out and signed on at the IMF for another five years.

This seemed to close off the opportunity for Mr Key.

But with the presidential election looming in France the burner keeps getting turned up on the Tapie Affair.

The reason is that the episode was ignited during the tenure of the previous president Nicolas Sarkozy whose minister of finance was Miss Lagarde.

It was she who signed off on the pivot of the whole affair which was to submit the Tapie Affair to special external arbitration rather than run it through the standard judicial process.

The recent Paris trial revealed that her advisers had recommended that Miss Lagarde do exactly this—turn the matter over to the standard judicial process.

In the event the finance minister, Miss Lagarde, handed the matter over to an ad-hoc collection of arbitrators.

The upshot of this was that the external arbitrators now proceeded to award to the sometime politician-impresario-speculator Bernard Tapie considerably in excess of half a billion dollars of taxpayer money.

This was in compensation for a Barnard Tapie business deal that went wrong.

This was the famed Adidas deal.

It remains a deal for which most French taxpayers still cannot work out how in the first place they became involved in, let alone how they became liable for it.

In France the affair is often described as an “arnaque par l’etat contre l’etat,” a swindle by the state against the state.

An extraordinary insight during the recently-completed proceedings into the French politico-judicial relationship was that a big slice of this half billion dollar compensation was awarded directly to the Tapie family and tax free.

This it turned out was because of the stress that the Tapie family were considered to have endured during the family’s efforts to claim the compensation.

Even by Latin standards of the spoils system, this was considered a bit much

The unspoken inference hovering over the affair was to the effect that the appointed independent arbitrators in arriving at their generous compensation had somehow and personally been accessed during their deliberations.

By forces favourable to the litigant.

Back now to Mr Key.

He is the logical replacement to Miss Lagarde for a number of reasons.

There cannot be a third IMF managing director from France because the last two have figured so prominently in court proceedings.

There was Dominique Strauss-Kahn who was Miss Lagarde’s predecessor. He figured in a New York courtroom. Then, just days ago, and in Paris now, there was Miss Lagarde herself.

The tradition has always been that the head of the World Bank comes from the United States and that the International Monetary Fund chief comes from Europe.

The World Bank swerved away from this. It was felt that that the IMF would follow.

When it looked as if Miss Lagarde might have to stand down there was mooted an idea to recruit someone to fill the IMF role from a developing nation.

The problem is that developing nations are highly suspicious of the IMF and its motives. So a candidate from an emerging economy, should they be made available, is likely to be regarded as part of a wider conspiracy perpetrated by the United States.

Even so, it is the United States that has in effect the casting vote on the appointment of the IMF managing director.

President Obama is something of a soul brother with Mr Key and if public indignation were to mount to boiling point in France there is still time for Mr Key’s name to go forward.

The reason the Tapie Affair will stay on the burner is that front-runner to become the next president of France is Francis Fillon.

He was prime minister during the previous Sarkozy presidency.

It was during Mr Fillon’s watch as prime minister that the Tapie deal was so surprisingly routed through arbitration instead of the judicial process.

The endless Tapie Affair is now lapping around his presidential campaign.

More recently still there are signs that a president Donald Trump might be favourable to the appointment of the New Zealander to head what he regards as a chaotic and even dangerous agency, the IMF.

Mr Key (pictured above with Chrstine Lagarde) is said in Europe to be grateful to be out of the political epicentre to a large extent because of the way in which in the Westminster sphere such as New Zealand, a prime minister assumes a show business status in which every aspect of their life, private and public, becomes part of the national entertainment.

Curiously under the republican modus operandi in France this is forbidden by statute and the way in which media can cover the lives of elected official is drastically curtailed.

The belief therefore is that if Mr Key with his solid Wall Street and international political careers was to be called, that he would serve.

|  From the MSCNewsWire reporters desk  | saturday 24 december 2016  |