France's Lagarde runs for IMF despite probe cloud

25th May 2011, Comments 0 comments

French Finance Minister Christine Lagarde launched her bid Wednesday to head the International Monetary Fund after winning broad European backing, vowing to run even if judges probe her role in a business dispute.

If appointed, Lagarde would be the first woman to head the IMF, taking over from her countryman Dominique Strauss-Kahn who resigned to fight charges of sexually assaulting a New York hotel maid.

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 IMF tradition dictates.

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

The embarrassment that Strauss-Kahn's arrest caused French authorities has not deterred other European powers from endorsing another French candidate to head the global lender, nor have the judicial proceedings hanging over Lagarde.

Judges will decide on June 10 whether to accept a prosecutor's demand that they investigate allegations that Lagarde exceeded her authority in her handling of a high-profile dispute involving tycoon Bernard Tapie which resulted in a big compensation payout.

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

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

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

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

Barroso said Lagarde's credentials and commitment to reforming economic governance were "indispensable to accomplish the mission of the IMF."

Germany, France, Britain and Italy have also backed her but the United States, where Lagarde is generally respected, appears reticent.

US Treasury Secretary Timothy Geithner on Wednesday called Lagarde and Mexican central bank head Agustin Carstens "very credible" candidates, without endorsing either.

"There may be others to join them," Geithner added.

However a top Russian diplomat hinted that Moscow could follow China's lead among major emerging economies in supporting Lagarde to head the IMF at a G8 summit this week.

Aleksandr Krestiyanov, charge d'affaires at the Russian EU embassy, said in Brussels the "only feeble point for Lagarde" is the judicial probe in France into the banking affair.

The IMF post is traditionally held by a European but, despite the growing support for Lagarde, emerging economies have increasingly complained 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."

On Wednesday Brazil's Finance Minister Guido Mantega said his country was not ready to choose between Lagarde and Mexico's Carstens.

In Ottawa Canadian Finance Minister Jim Flaherty also raised the two names together, calling both "highly qualified".

Lagarde has cut an impressive figure as the first woman 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.

European nations hold close to one-third of the IMF's votes and the United States nearly 17 percent, while Asian nations hold around 20 percent with the rest held by other countries.

Lagarde said Wednesday that "being European is not a handicap, nor an asset."

© 2011 AFP

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