Lagarde runs for IMF despite probe cloud

May 25, 2011 12:00 am

, PARIS, May 25 – French Finance Minister Christine Lagarde launched herself on Wednesday as a candidate to head the International Monetary Fund, even if judges probe her role over a business dispute.

Lagarde, a respected figure on the world financial stage, has received wide European backing for the post, although emerging powers have complained that the job should not automatically go to a European, as is IMF tradition.

"I have decided to present my candidacy" for the job, she told reporters, adding that she had made the decision "after mature reflection" with the backing of French President Nicolas Sarkozy.

Judges are due to decide on June 10 whether they will agree to a prosecutor\’s demand that they investigate allegations that Lagarde exceeded her authority in the way she handled a high-profile scandal involving tycoon Bernard Tapie.

"I have every confidence in this (judicial) procedure and I have a perfectly clear conscience" about the Tapie affair, Lagarde told reporters.

"If the investigation goes further, I will still maintain my candidacy."

If appointed, Lagarde, a former champion swimmer, would be the first woman to head the IMF.

The fund is the global emergency lender with a key role in calming the effects of the financial crisis on public finances in Europe.

An EU source said on Friday that Lagarde, 55, was practically certain to become Europe\’s candidate, although she has been dogged by accusations over her decision to appoint independent arbitrators in the Tapie affair.

Lagarde gained fresh endorsements on Wednesday, with the head of the European Commission Jose Manual Barroso saying he fully supported her candidacy.

Germany, France, Britain and Italy have backed her. Key IMF voting power the United States, where Lagarde is generally respected, and Japan have yet to openly declare a preference.

Barroso said in a statement that Lagarde\’s credentials and commitment to reforming economic governance was "indispensable to accomplish the mission of the IMF and its vital contribution to the stability of the international economy."

Lagarde has cut an impressive figure as the first female finance minister of a G7 power, earning a reputation for grace and grit amid the storms of the global financial crisis and now the eurozone debt crisis.

The IMF\’s former head, Frenchman Dominique Strauss-Kahn, resigned last week after his arrest in New York on sexual assault charges.

The post is traditionally held by a European, but emerging economies complain that it should be opened up to their candidates.

IMF directors from Brazil, Russia, India, China and South Africa — the so-called BRICS economies — said in a declaration that Europe\’s longstanding grip on the IMF leadership "undermines the legitimacy of the Fund."

The 2008-2009 financial crisis in the United States and Europe showed the need to reform institutions like the IMF "to reflect the growing role of developing countries in the world economy," they added.

Lagarde said on Wednesday: "Being European is not a handicap, nor an asset."


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