Leader Profile: Christine Lagarde | Controversy or Inherent Risks of Leadership?

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Introduction

As global leaders become increasingly involved in affairs that impact domestic issues and policies, it is important to become aware of the controversies, challenges, and successes that surround them.  Christine Lagarde is one of the most powerful women in the world.  As she recently became target of an ethical and legal investigation with the French government as a former government official, questions arise regarding followers’ perceptions and reactions to global leaders’ involvement in controversies.

It is curious to ponder whether the investigation will impact (negatively or positively) Ms. Lagarde’s influence on global economic policies.  Will world authorities trust her leadership?

Perhaps Ms. Lagarde’s decision in the case was perfectly legal and ethical based on the information she had available.  Did she become target of the investigation based on her gender, her level of power and influence, her wealth?  These and other questions should come to mind while reading this Leader Profile as well as relevant sources on the issue.

At the end of the Profile, additional discussion questions are available to prompt critical thinking and analysis.

Christine Lagarde

Ranked #7 Power Women by Forbes (“Christine Lagarde,” n.d.) in 2013 (up from #8 in 2012), Ms. Lagarde is the Managing Director of the International Monetary Fund (IMF).  A French national, Lagarde has two children and spent part of her career in the United States as a labor and antitrust attorney.  Lagarde is also the first woman to hold a finance/economy ministry position for a G-7 country (“Christine Lagarde,” 2011).

In 2009, Christine Lagarde was ranked the 17th most influential woman in the world by Forbes magazine, the 5th best European executive woman by The Wall Street Journal Europe, and became one of Time magazine’s top-100 world leaders. The Financial Times named her European Finance Minister of 2009.” (“Christine Lagarde,” 2011)

Her impressive résumé makes her a strong candidate for positions requiring strong leadership abilities and skills to revitalize failing systems.

Upon ascending to the position of Managing Director of the IMF, her main focus was to resurrect the European economy from a debt crisis (Forbes, n.d.).  While in this position, Ms. Lagarde had become target of investigation over her involvement with an ethical situation in France.

Controversy: Investigation of Ms. Lagarde

The controversy in question is whether Christine Lagarde unethically decided to privately arbitrate in 2008 a €250 million ($385 million) payment to a supporter of former French President, Nicolas Sarkozy (“IMF’s Largarde,” 2013).  During the time of the arbitration, Lagarde was Finance Minister under then-President Sarkozy, and simultaneously a legal dispute erupted between a Mr. B. Tapie and the French government.

The case came about when Mr. Tapie sued the state after he sold his stake in Adidas to a state-owned bank.  Tapie claims that the state unethically entered the transaction, because it sold the shares for Adidas for a much higher sum (“IMF’s Lagarde,” 2013).  Lagarde became target of investigation over questions regarding her decision to arbitrate the large payment, ignoring adviser’s urging to seek settlement in court (“IMF’s Lagarde,” 2013).

After much time the public wondered whether French officials might indict Ms. Lagarde, drop the investigation, or take another course of action, French magistrates reduced Lagarde’s status from “under investigation” to “supervised witness” (“IMF’s Lagarde,” 2013).  Upon the decision, Ms. Lagarde stated, “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” (“IMF’s Lagarde,” 2013).

Reuters continues to analyze the decision, stating: “The status of supervised witness means that in any future hearings, Lagarde would answer questions as a witness accompanied by a lawyer.  It is much less serious than being placed under formal investigation, which would have indicated ‘serious or consistent evidence’ pointing to her probable implication in a crime” (“IMF’s Lagarde,” 2013).

Lagarde’s Leadership

Some might argue an investigation is neither proof nor evidence of wrongdoing, and therefore, analysis of Lagarde’s leadership impact is unnecessary.  Yet others might weigh her leadership impact against the allegations of the investigation in order to come to their own conclusion.

On Lagarde’s leadership results, Charlton (2013) writes, “Lagarde has earned praise for her negotiating skills as managing director of the IMF through Europe’s debt crisis and is seen as a trailblazer for women leaders.”  In 2012, the IMF spent over $15 billion in assistance funds to support economies in need, with $4.4 billion already spent in 2013 Q1 (“IMF Financial Activities,” 2013).  Additional resources below (see “References”) point to further discussion on her leadership style and impact.

Discussion Questions

  1. If a leader who inspires you is under investigation, does that influence how you view their leadership?   In what way?
  2. Is controversy an inherent risk to leadership?  If so, does this risk increase for high-profile leaders?
  3. Do you believe it was just to bring Ms. Lagarde under investigation?  Explain why or why not.
  4. Watch the Q&A session with Ms. Lagarde on the BBC’s HARDtalk.  What are your reactions to how Ms. Lagarde responds to questions about the IMF and global economies?

References

Charlton, Angela (2013).  “Christine Lagarde, IMF Chief, Questioned in Court over Fraud Probe.”  The Huffington Post.  Retrieved June 3, 2013, from http://www.huffingtonpost.com/2013/05/23/christine-lagarde-imf-chief-questioned_n_3326106.html.

“Christine Lagarde.” (2011).  International Monetary Fund (IMF).  Retrieved June 3, 2013, from http://www.imf.org/external/np/omd/bios/cl.htm.

“Christine Lagarde.” (n.d.).   Forbes.  Retrieved June 3, 2013, from http://www.forbes.com/profile/christine-lagarde/.

“IMF Financial Activities – Update May 30, 2013.” (2013).  International Monetary Fund (IMF).  Retrieved June 3, 2013, from http://www.imf.org/external/np/tre/activity/2013/053013.htm.

“IMF’s Lagarde Escapes Formal Investigation in Court.” (2013).  Reuters.  Retrieved June 3, 2013, from http://www.reuters.com/article/2013/05/24/us-imf-lagarde-france-idUSBRE94N0UW20130524.

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