Christine Lagarde escapes total embarrassment and possible IMF-exit

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We will have to spend more time with Madame. Madame Christine Lagarde, managing director of International Monetary Fund, who narrowly escaped the total embarrassment for her and the organization she leads. French magistrate decided on Friday not to place her under formal investigation over role in businessman Bernard Tapie scandal. The court granted Madame the status of a “supervised witness”.

With Lagarde asserting she did not act against the public interest and the IMF assuring its support and confidence to its managing director, all seems quiet on that front.

Not that it would make much difference in IMF’s policies should Christine Lagarde be replaced. It would just have been the second big scandal for the international organization that allegedly struggles to restore the world’s economic order (lol).

“French magistrates decided on Friday not to place IMF chief Christine Lagarde under formal investigation over her role in a 285-million-euro ($368.5 million) arbitration payment made to a supporter of former president Nicolas Sarkozy.

Lagarde instead was given the status of a “supervised witness” after two full days of questioning on her 2008 decision as Sarkozy’s finance minister to use arbitration to settle a legal battle between the state and businessman Bernard Tapie.

Emerging from a Paris court late on Friday evening, a composed-looking Lagarde read from a statement asserting that she had not acted against the public interest.

“My explanations answered questions raised about the decisions that I had made at the time,” she told reporters. “My status as a supervised witness is not a surprise for me because I always acted in the interest of the state and according to the law.”

The status of supervised witness means that in any future hearings, Lagarde would answer questions as a witness accompanied by a lawyer.

The IMF reaffirmed its confidence in Lagarde, who took over the helm after her predecessor, Frenchman Dominique Strauss-Kahn, quit in mid-2011 over a sex assault scandal.

“The Executive Board has been briefed on this matter several times and on each occasion expressed confidence in the Managing Director’s ability to effectively carry out her duties,” spokesman Gerry Rice said in Washington. (Full story REUTERS)

PS I would lie, if I wouldn’t stress that millions of people in IMF-bailout countries would not applaud a Lagarde exit.