Wednesday, August 27, 2014

Washington Post: IMF Chief Lagarde Under Investigation in France

Things have been pretty quiet with the IMF lately. Ever since they were unable to get the US to pass the reforms that would increase the influence of the BRICS nations in the IMF, we have not really seen much major news from the IMF. But this story may turn out to be some major news. We'll keep an eye on it.

Christine Lagarde has not been in the news much lately, but today the Washington Post runs the story linked above. Below are a couple of quotes. It is too early to tell if this will lead to any kind of charges being filed. But a shakeup at the IMF will not help its credibility or efforts to move forward the reforms that have stalled.

"PARIS — Christine Lagarde, the chief of the International Monetary Fund, was placed Wednesday under official investigation for negligence in a French corruption probe that dates back to her days as France’s finance minister."
"In a statement after a fourth round of questioning before magistrates, Lagarde said she would return to her work in Washington later in the day and said the decision was “without basis.”
"Under French law, the official investigation is equivalent to preliminary charges, meaning there is reason to suspect an infraction. Investigating judges can later drop a case or issue formal charges and send it to trial."
As things stand right now, the IMF quota reforms seem unlikely to move forward any time soon. Any trouble for Christine Lagarde as head of the IMF won't help and the upcoming elections in the US appear to indicate that the US Congress will become even less likely to be favorable to approving the reforms. Most predictions are for the Republicans to gain Senate seats and hold the US House of Representatives. The Obama Administration seems to be falling further out of approval and they are the main force in the US that has been pushing for the reforms to be approved.

Since the big BRICS summit in mid July, we have seen very little news on that front either. Up until the summit we saw quite a few articles quoting various BRICS officials about replacing the US dollar as global reserve currency and continued calls to pass the IMF reforms. We even wondered if the BRICS were trying to use their new Bank and reserve fund as a kind of leverage to force the approval of the reforms.

But not much has been in the news lately and events seem to be moving farther away from the reforms being approved right now. We will continue to follow that and watch to see how the BRICS react to any problems Ms. Lagarde might have if those develope. In the world today things can quickly change which is why we have to continue to follow events.

Update: Here is another article that adds a little more info on the story, but it is still hard to tell if an actual criminal charge has been filed yet.

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