In Defence of IMF-Chief Christine LaGarde

Christine Lagarde, Managing Director, Internat...
Christine Lagarde, Managing Director, International Monetary Fund (Photo credit: Wikipedia)


It is curious that the revelation by the head of the International Monetary Fund (IMF) that she loses sleep over the poorly educated children of Niger and not the people of Athens, whom she clearly views as the architects of their own economic ‘malaise’, should have caused such a firestorm of recrimination.

It is perhaps true that those still convinced of the utility of the OECD/G-20 ‘white’ list as a gauge of country compliance with the global norms on transparency and tax information exchange; and its’ obvious imputation of ‘right-standing’ in matters of tax evasion and fiscal propriety might legitimately take exception to the scathing observations of the IMF head.

Indeed, it is a fact that although the Greece’s ‘debt’ crisis and the contagion of the Eurozone has everything to do with its:

  • institutionalised tax evasion;
  • patent lack of transparency in tax matters (domestic and international);
  • proven inability to bring to account those of its citizenry guilty of gross tax malfeasance; and
  • central role in byzantine cross-border financing;

the country is still a ‘white’ listed jurisdiction and therefore in ‘substantial compliance with the international standards on transparency and tax information exchange’.

This despite two revisions of the OECD index since it was published in 2009.

Had the former French Finance Minister been reminded of Greece’s ranking using an instrument voraciously touted by France as the new litmus test for country compliance and indispensable for the rehabilitation of the world’s financial system her remarks about Greece might have been rather more measured.

Consider the following two points:

  • Despite the revelations of the past four years about Greece’s role as the EU’s ‘onshore’ crucible of domestic and international tax evasion and ‘silent’ partner in the shadow banking that has unhinged the financial system, the country has escaped classification as a ‘tax haven’ by the OECD – the self-appointed global regulator and policy watchdog on these matters. Neither has Greece ever appeared on any OECD/G-20 list other than a ‘white’ one.
  • Greece’s combined OECD Global Forum (GF) Phase 1 and 2 Assessment which will evaluate its policy and practice in relation to transparency and tax information exchange was planned for the middle of last year. A report is yet to be issued. It will interesting to note the outcome since Greece has choosen this the preferred means of evaluation by other OECD members of the GF, and which for them has always resulted in a finding of ‘compliance’.

Now that the truth about the relationship between tax (and regulatory) evasion and lack of transparency has been shown to be significant contributing factors to Greece’s problems and those of its Euro partners surely it is reasonable to conclude that the country’s presence on the OECD ‘white’ list is a mockery.

Perhaps the reason why as yet there has been no connection made between the Greek ‘tragedy’ and the inconsistency of its G-20 listing is that the real reason behind the lists in the first place was less to do the fight against tax prevarication and opacity but about finding a cost-effective way of forcing countries like Switzerland and Luxembourg to abandon ‘secrecy’ as the pillars of their hugely competitive brand of offshore finance.

So in considering what she ought to lose sleep over (as sleep deprivation is an expected incident of ‘high’ office) was the IMF chief right to look behind the form of the G-20/OECD’s classification of Greece and speak to the ‘reality’ of what has led Europe to the brink of disintegration?


I would further suggest that though her unscripted comments may have over simplified the issue, done perhaps in deference to her former role in the service of the French government, her new position may have given her a better appreciation of the suspect value of the index as a means distinguishing the ‘fact’ from the ‘fiction’ of country compliance.




19 thoughts on “In Defence of IMF-Chief Christine LaGarde

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