In August last year French authorities began an investigation into possible negligence by Christine Lagarde, now head of the International Monetary Fund, in relation to events which led to the award of €400 million in compensation to billionaire businessman Bernard Tapie in 2008. Lagarde was finance minister in the government of Nicolas Sarkozy at the time. Tapie had been a major donor to Sarkozy's presidential campaign the previous year – having switched his support from the Socialist Party (SP) to Sarkozy's Union for a Popular Movement (UMP).
Tapie had complained that the partly state-owned Credit Lyonnais had either deliberately or as a result of incompetence undervalued his sports goods company Adidas when handling its sale back in 1993. At the time, he was divesting himself of a number of holdings as a prelude to joining François Mitterand’s SP government.
Lagarde became managing director of the IMF in 2011, in the aftermath of the resignation of then French presidential hopeful Dominique Strauss-Kahn following his arrest in New York on charges of sexual assault against a hotel maid.
Investigators are now examining allegations that the long-running Tapie case had been referred by Lagarde to an arbitration panel at least partially in return for his support of Sarkozy’s tilt at the presidency. Last June, Lagarde’s former chief of staff Stéphane Richard and Tapie himself were among four others placed under formal investigation for conspiracy to defraud.
Respectable company
Lagarde does not appear to feel constrained by these events when warning the Greeks that they will be cast out from respectable company if they refuse to behave with propriety and promise to conform to the rules of financial rectitude in future.
Meanwhile, the president of the European Central Bank, Mario Draghi, has been under fire for his actions, or inactions, in relation to a scandal involving structured trades in derivatives made by the world's oldest and Italy's third-largest bank, Monte dei Paschi di Siena, between 2006 and 2009, when Draghi was governor of the Bank of Italy.
The transactions were not reported to regulators. Former Italian economy minister Giulio Tremonti has described suggestions that Draghi had remained unaware of all this over three years as “stupefying”.
During the period, Draghi was also president of the Financial Stability Board, an international body tasked to improve and make more transparent the supervision and regulation of the banking system.
Draghi, a banker with Goldman Sachs before entering the public service, also faces questions about his knowledge of a series of “masked transactions” involving currency swaps which had the effect of making the Greek economy seem much healthier than it actually was, in order to meet the requirements of the Maastricht treaty and join the euro zone.
The Financial Times reported that around the same time, in the 1990s, a similar series of questionable manoeuvres was used with regard to Italy's entry into the euro zone, and that these had "happened with the implicit and explicit knowledge of such European and Goldman 'luminaries' as Helmut Kohl and Mario Draghi."
Tax deals
Last year, the
Guardian
reported that the third member of the trio which fronts for the troika, Jean-Claude Juncker, president of the
European Commission
, was “under mounting pressure as dozens more multinational corporate names are dragged into the
Luxembourg
tax scandal”. Juncker was Luxembourg’s prime minister when the majority of the tax deals were done.
Leaked documents had revealed tax avoidance on an industrial scale, finessed by “tax engineers” at Ernst & Young, Deloitte and KPMG. The deals washed profits made in other European countries clean of tax liability. The amounts squirrelled away from the revenue collectors of Europe ran to hundreds of billions of euro.
In December last, Margaret Hodge, chair of the Commons Public Accounts Committee, during an investigation into Luxembourg-headquartered Amazon's failure to pay any tax on enormous profits made in the UK, asked: "How can we know [Juncker] is working in the interest of Europe when as prime minister in Luxembourg he has exploited populations in every European country and elsewhere for decades?"
None of this is likely to give Juncker pause for thought over the next few days as he and his colleagues lay it on the line that enough’s enough, no more messing, the Greeks will have to make an act of public contrition and show firm purpose of amendment before they can expect another cent in aid from the IMF, the ECB or the EU.
The Greeks can do as they’re being told by Lagarde, Draghi and Juncker and die a slow death, or take a giddy leap into the unknown, or – this might do it – appeal for a European general strike.