Date of publication: 5 January 2017
Roman Marchenko, Attorney at Law, Senior Partner
Source: European Pravda
Recently, a French court found Christine Lagarde, a former Minister of Finance and now the Managing Director of the International Monetary Fund, guilty of negligence in the performance of ministerial powers yet in 2007.
The proceedings drew worldwide attention. At least the reason is that recovery of the world economy depends on the current position of Christine Lagarde. Changing the IMF Managing Director (and in case of judgment of conviction it was inevitable) can make everybody nervous.
What was the IMF Managing Director accused of? Nine years ago she approved case referral to the Arbitration Commission, i.e. in the opinion of the prosecutors, facilitated allocation of compensation of EUR 403 mln to the businessman Bernard Tapie for almost ten years delay in payment of penalty of EUR 91.5 mln.
In the early 1990s, Tapie sold his company through the French state bank Credit Lyonnais, and later accused the bank of defrauding. In 1996, the court ruled in favor of the businessman, but the money was not paid to him, which led to the new claims.
Initially Lagarde was suspected of abuse of office and complicity in fraudulent activities.
Then the charge was changed and she was accused of “negligence in office” as, when making decision, she acted hastily and actually deprived the state of the chances to oppose to unjustified expenditure of public finances.
The court decision on Lagarde was quite unusual, especially in terms of Ukrainian practice. The defendant was convicted in part, only in one of the two charges. However, in this situation she did not get any punishment – even a minimum penalty.
As a result Lagarde got away almost clean – according to the French system she will not be considered convicted at all.
The attorneys worked perfectly and were satisfied with the judgment, although they would not be against full justification of their client. In any case, they are not going to submit a cassation.
Can the situation be the same in Ukraine? No.
If the Ukrainian court finds the person guilty, he will bear some punishment. Certainly, it can be easy, e.g. a small fine or imprisonment with a suspended execution – what used to be called a conditional sentence.
The absence of any penalty in terms of our system seems strange, however, in French practice it happens.
In Ukraine the officials are accused of embezzlement or abuse of power rather than negligence. However, such crimes require mandatory proof of intent and illegal enrichment.
It means that investigation must convince the court that the accused deliberately caused harm either acting in his/her own interests or in the interests of a third party. Certainly, in our reality, as well as in French one, it is extremely difficult to prove, e.g. through obtaining confession from the accomplices.
The example known to each Ukrainian citizen is the case of Yulia Tymoshenko. She was tried for signing the directive of NJSC Naftogaz of Ukraine to negotiations with Gazprom without the appropriate powers. It is clear that it was difficult to prove intent and receipt of benefits, but the old regime “managed”.
However, the sentence was obviously of poor quality and was canceled subsequently.
That is why in such cases, the more lenient punishment is used for the suspect and “simpler” for the investigation – negligence.
That is, when the official gained no direct benefit either for himself or for friends and relatives (or the investigators are unable to prove it), but at the same time, his negligent actions resulted in damage.
However, any decision of the official can be interpreted as negligence, everything depends only on ingenuity of the prosecutors.
Let us take an example from the Ukrainian realities. The state enterprise has been suing for debts for some years. It loses in courts. There appears a buyer, who is ready to buy out debt at a discount. However, later discount is interpreted as damage. The prosecutors’ idea is collaborative embezzlement at most and negligence at least.
Such decisions are made by officials almost every day, and almost any of them can be questioned.
The most primitive example is some official refused to issue a license. He may be charged with negligence alleging that he did it wrong and in violation of the legislation, especially if the entrepreneur, e.g. recognizes non-issuance as illegal and sues the state for lost profits.
If the officer still issued a license, he can be accused that it was done in the interests of a third party without sufficient legal grounds.
In fact, each official, who makes decisions and signs documents, bears such risk every day. Here we can only hope for sound judgment of investigators, prosecutors and judges, who must be guided not by cry of “betrayal” in FB, but a clear understanding that the same as in business sometimes really non-obvious and controversial decisions can be made.
The Lagarde’s sentence shows how much a European official is free in his actions, even taking a decision on a controversial issue that is very likely to result in a subsequent trial.
In Ukraine, officials have no confidence in adequacy of the investigation process. So they just sit in their places usually being afraid of showing the slightest initiative “to be on a safe side” as “the prosecutor will call to account”.
Is it good or bad? As practice shows, unscrupulous officials are able to “find their interest”, while keeping away from any important decisions. As a result, the Ukrainian public sector seems uncompetitive not only in comparison with the private sector, but also with the state-owned companies of the European countries.
It does not happen by accident. It is very likely that if the case of Lagarde had been considered in Ukraine, she would have faced a real criminal sentence rather than the French acquittal.
Damage is painfully great, and Tapie, who made hundreds of millions on it, is disliked by the people, just like any wealthy man…