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11.27.19

Understanding Thierry Breton: “Mister Cash” and “Madame Bailout”

Posted in Europe, Finance at 4:35 am by Dr. Roy Schestowitz

Overview

Understanding Thierry Breton

Further parts pending review and research


Lagarde with mirrors
The IMF’s “Madame Bailout”: Always smiling, always polite –
“but she’s an American lawyer at heart – a killer shark”

Summary: In December 2016 Lagarde was found guilty of negligence but served no time because of connections

The bromance with Nicolas may have turned sour but Thierry continues to enjoy cordial relations with other former cabinet colleagues.

One person with whom he has maintained close links over the years is the high-flier Christine Lagarde, the IMF’s “Madame Bailout”, who is regularly fêted in media puff-pieces as the “rock-star” of international finance.

Lagarde was appointed head of the International Monetary Fund in 2011 and has recently moved back across the Atlantic to take over the helm at the European Central Bank in Frankfurt.

“She handled major antitrust and labour cases, was made partner after six years and was named head of the firm in Western Europe. She joined the Executive Committee in 1995 and was elected as company chairman in October 1999.”Her career began as a lawyer back in the 1980s when she joined the Chicago-based international law firm Baker & McKenzie as an associate after completing law studies in Paris in 1981. She handled major antitrust and labour cases, was made partner after six years and was named head of the firm in Western Europe. She joined the Executive Committee in 1995 and was elected as company chairman in October 1999.

According to press reports, Lagarde’s years working in America gave her “an empathy with Anglo-Saxon ways” and “a pragmatic, team-oriented style of solving problems”.

But the charming and elegant facade conceals a ruthless streak. One official who had the misfortune to fall out with her put it like this: “She’s always smiling, always polite, but she’s an American lawyer at heart – a killer shark”.

In May 2005, Lagarde left her legal career in Chicago and returned to France to take up a position as Minister for Foreign Trade under President Jacques Chirac and his Prime Minister, Dominique de Villepin.

“While Thierry’s wife, Valerie, was off on a jolly up the Ganges with First Lady Bernadette Chirac, Thierry and Christine were busy posing for official photo-ops alongside Uncle Jacques.”A few months earlier in February 2005, Thierry Breton had assumed his portfolio as Minister for the Economy.

The two newcomers at the cabinet table had some common ground because they were not career politicians but had started their careers in the private sector. In addition to this they were both ideologically aligned to the neo-liberal wing of the UMP.

Press photos from that period often show Breton and Lagarde in tandem, frequently appearing together with their political patron, Jacques Chirac.

Lagarde's plane meeting
On board the presidential jet with defence minister Michele Alliot-Marie (February 2006)

For example, they were among the select group of ministers who accompanied Chirac on his state visit to India in February 2006.

Chirac, Lagarde and Breton
Accompanying Uncle Jacques on a state visit to India (February 2006)

While Thierry’s wife, Valerie, was off on a jolly up the Ganges with First Lady Bernadette Chirac, Thierry and Christine were busy posing for official photo-ops alongside Uncle Jacques.

Official press photos from the period indicate a strong professional rapport between the Ministers for Economy and Foreign Trade who often appear in public like two peas in the proverbial pod.

lagarde and Breton
The ministerial duo – like two peas in the proverbial pod

It comes as no surprise to find that the pair continued to rub shoulders at social events long after Thierry had departed from the cabinet table. A photo from 2009 shows the pair enjoying a “night at the opera” in Paris where they attended a gala performance of Verdi’s Macbeth organised by the Friends of the Paris Opera.

Lagarde and Breton true love
A night at the opera: attending a performance of “Macbeth” in Paris (April 2009)

As we have seen, Sarkozy decided to ditch Breton as Minister for Economy when he took over the reins of power in France in May 2007.

However, he kept the “killer shark” Lagarde on his team. She was initially assigned to the Ministry of Agriculture but a few weeks later after a disappointing election result for the UMP, Sarkozy decided to reshuffle his recently-formed cabinet.

As a result of this reshuffle, Lagarde was moved to the Ministry for Economy (Bercy) where she was mandated to oversee various reforms, including tax cuts and the implementation of measures to liberalise the labour market.

Lagarde remained at Bercy until mid-2011 when a high-profile international scandal that erupted around the IMF boss Dominique Strauss-Kahn suddenly and unexpectedly opened up a new career opportunity for her.

DSK and Lagarde
Lagarde with IMF head honcho DSK – the body language says it all…

On 14 May 2011, Strauss-Kahn (often referred to by his initials as “DSK”) was arrested and charged with the sexual assault and attempted rape of 32-year-old Nafissatou Diallo, a chambermaid at the Sofitel New York Hotel in Manhattan earlier that day.

At the time of the alleged attack, Strauss-Kahn was the head of the International Monetary Fund (IMF) and a kingpin of the French Socialist Party where he was regarded as the favoured candidate for the upcoming French Presidential election in 2012.

“Strauss-Kahn’s position at the IMF quickly became untenable as criminal proceedings were opened against him in New York on charges of sexual assault and attempted rape. Four days after his arrest, he resigned as head of the IMF.”But, as is well known, a week is a long time in politics. Strauss-Kahn’s position at the IMF quickly became untenable as criminal proceedings were opened against him in New York on charges of sexual assault and attempted rape. Four days after his arrest, he resigned as head of the IMF.

The criminal charges were eventually dismissed at the request of the prosecution due to doubts about the testimony provided by the alleged victim and a lack of conclusive physical evidence. Diallo filed a parallel civil suit against Strauss-Kahn which was settled out of court for an undisclosed amount, reported to have been $1.5 million.

The affair brought a sudden and abrupt end to Strauss-Kahn’s IMF career on the international stage. However, his difficulties turned out to be a golden opportunity for Lagarde.

Her privileged relationship with Sarkozy propelled her to the forefront in the IMF succession stakes and before long she was once again on her way across the Atlantic to take up her new position in Washington D.C.

But the past was about to catch up with her.

Several months after her appointment as head of the IMF, the public prosecutor in France recommended an investigation into her involvement in a massive government payout to businessman Bernard Tapie in 2008.

The case itself was decades old, going back to the 1990s when Tapie had to sell his stake in the sportswear firm Adidas because he became a government minister under François Mitterand. From 1993 to 2008 a long-drawn out legal battle took place between Tapie and the partly state-owned Crédit Lyonnais bank. Tapie claimed that Crédit Lyonnais had short-changed him when it sold Adidas on his behalf.

In 2008, the case was referred to a special arbitration panel which ruled that Tapie should receive compensation of €404 million from the French state. Lagarde, who was Minister for Finance at the time, decided that the ruling should be accepted without challenge.

Bernard Tapie
Bernard Tapie received an award of €404m approved by Lagarde

The case was controversial because Tapie was a close friend of Sarkozy and he was reported to be on the verge of bankruptcy at the time of the settlement. It was alleged by opposition politicians that the settlement procedure had been politically motivated and was designed to reward Tapie for his support for Sarkozy during the 2007 election campaign.

“…a special court established to try cases of ministerial misconduct, ordered that Lagarde should stand trial for alleged complicity in the misuse of public funds.”On 3 December 2015, a French court ruled that Tapie should return the compensation with interest. A few days later, the Court of Justice of the Republic, a special court established to try cases of ministerial misconduct, ordered that Lagarde should stand trial for alleged complicity in the misuse of public funds.

Lagarde trial
Not amused – Christine Lagarde on the opening day of her trial in Paris (12 December 2016)

Following a hearing which took place in December 2016, Lagarde was found guilty of negligence. She was not present in court to hear the verdict because she had already left Paris to return to her IMF job in Washington.

Lagarde could have faced up to a year in prison and a fine of €15,000 upon conviction, but the court decided that she should be spared a sentence. And so, incredibly, despite the guilty verdict she emerged from the trial without a criminal record.

The court’s ruling, which took many by surprise, was “explained” by the presiding judge Martine Ract Madoux as follows: “The context of the global financial crisis in which Madame Lagarde found herself in should be taken into account.” The judge also cited the court’s desire to protect Ms Lagarde’s “good reputation” and “international standing” as reasons for not imposing a sentence!

“Following a hearing which took place in December 2016, Lagarde was found guilty of negligence.”To the outside observer, it seems like a clear case of “different strokes for different folks” in the land of “Liberty, Equality and Fraternity”.

Despite the leniency of the court, the episode must have been an unpleasant experience for someone like Lagarde who is not used to standing in the dock. But, despite the public embarrassment, she could take consolation from the loyal support that she received from many old friends during her ordeal.

These included her former cabinet colleague, Thierry Breton, who dutifully attended the hearings and was spotted in the foyer of the court exchanging pleasantries with Claude Soulier, general secretary of the CJR on 14 December 2016.

Claude Soulier and Breton
Breton with Claude Soulier, general secretary of the Court of Justice of the Republic, prior to a hearing of IMF boss Christine Lagarde (14 December 2016)

Whatever emotional distress Lagarde may have suffered from her little scrape with the CJR, she emerged unscathed from this encounter with the wheels of justice.

As one cynical commentator chose to put it: “As is usual for white-collar establishment criminals in France, she did not receive any formal punishment, and was left to get on with her career.”

Her term at the IMF was due run until 2021, but in July of this year Lagarde announced that she was stepping down early and would leave on 12 September 2019.

She hadn’t fallen victim to some sleazy PR disaster like her predecessor the self-confessed “libertine” and reported sexual predator, Strauss-Kahn. Nor was she facing fresh allegations of ministerial misconduct. On the contrary, she had her eyes set on a new career move.

“…Thierry Breton, who dutifully attended the hearings and was spotted in the foyer of the court exchanging pleasantries with Claude Soulier, general secretary of the CJR on 14 December 2016.”As it happened, Lagarde had just been nominated by EU leaders to replace the outgoing European Central Bank president Mario Draghi from 1 November. Her nomination was approved by the European Parliament on 17 September and her appointment was officially confirmed in October.

According to Politico, the choice of Lagarde for the top ECB post was the result of a Franco-German political “horse-trading” deal in return for which the Germans received the top job at the European Commission which was assigned to Ursula von der Leyen (née Albrecht).

There are still a lot of unanswered questions about Lagarde’s “non-conventional” appointment as president of the ECB but this is not the place to go into them.

All that remains to be said at this point is that it now seems almost certain that “Madame Bailout” will soon be joined in the upper echelons of the EU Nomenklatura by her old cabinet colleague, Thierry “Mister Cash” Breton, as soon as his nomination as Commissioner for the Internal Market has been rubber-stamped.

We will just have to wait and see whether or not Thierry will be at the receiving end of any gushing missives from Christine such as the “pledge of allegiance” which she addressed to her former political patron, Sarkozy.

According to press reports, this “billet-doux” to Sarkozy was found during a police raid on Lagarde’s Paris flat in 2013 in the course of investigations into the Tapie affair:

Dear Nicolas, very briefly and respectfully,
1) I am by your side to serve you and serve your plans for France.
2) I tried my best and might have failed occasionally. I implore your forgiveness.
3) I have no personal political ambitions and I have no desire to become a servile status seeker, like many of the people around you whose loyalty is recent and short-lived.
4) Use me for as long as it suits you and suits your plans and casting call.
5) If you decide to use me, I need you as a guide and a supporter: without a guide, I may be ineffective and without your support I may lack credibility.
With my great admiration,
Christine L.

In the next part we will explore Thierry’s connections to another UMP luminary, albeit a relatively minor one – Benoît Battistelli, a deputy-mayor of Saint-Germain-en-Laye, who gained notoriety as president of the European Patent Office.

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