IMF head Christine Lagarde is facing trial French trial for alleged negligence over a €404 million ($438 million) payment to businessman Bernard Tapie in 2008.
Christine Lagarde, 59, was finance minister in President Nicolas Sarkozy’s government at the time of the compensation award to Bernard Tapie for the sale of a company.
Bernard Tapie supported Nicolas Sarkozy in the 2007 presidential election.
Christine Lagarde’s lawyer described the court’s decision as “incomprehensible”, and said the IMF chief would appeal.
In a statement Christine Lagarde said she had “always acted in this affair in the interest of the state and in respect of the law”, AP reported.
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Bernard Tapie was once a majority shareholder in sports goods company Adidas but sold it in 1993 in order to become a cabinet minister in Francois Mitterrand’s Socialist government.
He sued the Credit Lyonnais bank over its handling of the sale, alleging that the partly state-owned bank had defrauded him by deliberately undervaluing the company.
Bernard Lagarde’s case was later referred by Christine Lagarde to a three-member arbitration panel which awarded the compensation, causing a public outcry.
Investigators suspect he was granted a deal in return for his support of Nicolas Sarkozy.
Earlier this month, a French court ruled that Bernard Tapie was not entitled to any compensation for that sale and should pay back the €404 million with interest.
France’s Court of Justice of the Republic (CJR) decided that Christine Lagarde should be tried on the charge of “negligence by a person in position of public authority” over the compensation case, iTele TV channel and the Mediapart website reported on December 17.
A court spokesman later confirmed the decision.
If convicted, Christine Lagarde could be sentenced to one year in prison.
French media said the CJR investigation magistrates declined to follow the recommendation of another court which last year decided not to pursue the case.
“I will recommend Mrs. Lagarde appeal against this decision.”
A spokesman for France’s attorney general said Christine Lagarde would have five days to appeal, once the court decision is made public on December 18 or December 21.
Meanwhile, IMF spokesman Gerry Rice said the organization – which represents 188 member nations – “continues to express its confidence in the managing director’s ability to effectively carry out her duties”.
Christine Lagarde replaced Dominique Strauss-Kahn as IMF managing director in 2011.
Dominique Strauss-Kahn – also a former French minister – resigned following his arrest in New York on charges of assault that were later dropped.
Stephane Richard, CEO of France Telecom-Orange, has been held in custody for questioning in Bernard Tapie corruption case.
Stephane Richard, who previously worked in the French Finance Ministry, was quizzed over his role in a 2008 payment made to the businessman Bernard Tapie.
The businessman denies any wrongdoing.
Christine Lagarde, the head of the International Monetary Fund (IMF), has also been called upon to testify in the case.
She was the French Finance Minister at the time in question while Stephane Richard was her chief of staff.
Stephane Richard, CEO of France Telecom-Orange, has been held in custody for questioning in Bernard Tapie corruption case
France Telecom-Orange said the questioning was expected and that Stephane Richard remained in charge. He can be held for up to 48 hours.
His contract at the partly state-owned company is up for renewal next year and the position is chosen by the government.
“The state in its role as a shareholder will take a position if needed at the right time on the continuing case,” Industry Minister Arnaud Montebourg said in a statement.
The Court of Justice of the Republic, which investigates ministerial misconduct in France, is looking into claims that Bernard Tapie may have received favorable treatment because of his support for the former President, Nicolas Sarkozy.
He received a payment of 400 million euros ($520 million) as part of a settlement in a long-running business dispute, which critics say was too generous.
After two days of questioning Christine Lagarde was made a key witness in the case – a status that means she is unlikely to be prosecuted.
Christine Lagarde has arrived at a court in Paris for questioning over a payout to controversial tycoon Bernard Tapie during her time as finance minister.
The IMF chief is being asked to explain her handling of a row in 2007 which resulted in some 400 million euros ($516 million) being paid to Bernard Tapie.
She is appearing before the Court of Justice of the Republic (CJR), which investigates ministerial misconduct.
Christine Lagarde insists the award was the best solution at the time.
“It’s a pleasure to see you,” a smiling she told reporters upon arrival.
Christine Lagarde could be placed under formal investigation for the decision to use arbitration, against advice from senior advisers, to settle a long-running court battle between the state and Bernard Tapie, a supporter of the then French President, Nicolas Sarkozy.
Christine Lagarde has arrived at a court in Paris for questioning over a payout to controversial tycoon Bernard Tapie during her time as finance minister
The case stretches back to 1993 when Bernard Tapie, a colorful, controversial character in the French business world, sold his stake in sports company Adidas to Credit Lyonnais.
Soon after the bank sold on that stake for a much bigger profit, Bernard Tapie claimed they had defrauded him.
In 2007, President Nicolas Sarkozy suggested the finance ministry – which had been overseeing the dispute and was led by Christine Lagarde – should move the case to arbitration.
Bernard Tapie won a much bigger payout than he might have expected in court.
Christine Lagarde is not accused of profiting from the payout, but she is being questioned over the misuse of public funds.
If she is placed under formal investigation it is of course embarrassing. It is a step closer to trial but it does not necessarily mean the case will end up in court.
Christine Lagarde is still one of the most popular politicians on the right in France. And after the disgrace that was heaped on the last IMF chief, Dominique Strauss-Kahn, few in France want to see another prominent French politician embarrassed on the world stage.
Some on the right wonder whether she could be a future candidate for first female French president, notably because she has stayed outside the conservative UMP party’s vicious in-fighting.
Christine Lagarde, a perfect English speaker, has never expressed a desire to run for president. But her five-year term at the IMF is due to finish in 2016 – a year before the next presidential election. With her acumen she may be a dangerous opponent for President Francois Hollande.
The International Monetary Fund has said it continues to have “confidence” in its managing director Christine Lagarde despite a French inquiry into alleged abuses of power.
An IMF spokesman said the fund’s board backed Christine Lagarde.
The probe relates to Christine Lagarde time as French finance minister and her involvement in the payment of compensation to businessman Bernard Tapie.
Christine Lagarde, who took over as IMF chief in 2011, denies any wrongdoing.
Her Paris apartment was searched by police investigators last week.
The IMF continues to have confidence in its managing director Christine Lagarde despite a French inquiry into alleged abuses of power
“The executive board has been briefed on this matter, including recently, and continues to express its confidence in the managing director’s ability to effectively carry out her duties,” said IMF spokesman Gerry Rice at a press conference on Thursday.
Christine Lagarde was involved in a dispute between French businessman Bernard Tapie and the bank Credit Lyonnais in 2007.
She referred the case to an arbitration panel, after which Bernard Tapie switched his support to Nicholas Sarkozy, then leader of Christine Lagarde’s UMP party, in the presidential election campaign.
Bernard Tapie was later awarded 400 million euros in damages by that panel – a decision approved by Christine Lagarde.
Christine Lagarde has yet to be placed under formal investigation in the case and has denied any wrongdoing.
However, the case comes at a difficult time for the IMF.
Christine Lagarde replaced IMF disgraced former chief Dominique Strauss-Kahn less than two years ago.
The IMF is also deeply involved in managing the continuing eurozone crisis, including the bailout of Cyprus.
French police have searched the Paris apartment of IMF chief Christine Lagarde, as they investigate her role in awarding financial compensation to businessman Bernard Tapie in 2008.
As finance minister, Christine Lagarde referred Bernard Tapie’s long-running dispute with bank Credit Lyonnais to an arbitration panel, which awarded him 400 million euros damages.
Bernard Tapie was a supporter of ex-President Nicolas Sarkozy.
Critics say Christine Lagarde abused her authority but she denies any wrongdoing.
“This search will help uncover the truth, which will contribute to exonerating my client from any criminal wrongdoing,” Christine Lagarde’s lawyer, Yves Repiquet, told the Reuters news agency.
Investigators suspect Bernard Tapie was granted a deal in return for his support of President Nicolas Sarkozy in the 2007 election.
There is speculation in France that Christine Lagarde could yet be placed under formal investigation in this case.
As finance minister, Christine Lagarde referred Bernard Tapie’s long-running dispute with bank Credit Lyonnais to an arbitration panel, which awarded him 400 million euros damages
The origins of the case date back 20 years.
Bernard Tapie, who has long been active in French business, sporting and political circles, sued Credit Lyonnais over its handling of the sale in 1993 of sportswear brand Adidas, in which he was a majority stakeholder.
After years in the courts, the case was referred by Christine Lagarde to an arbitration panel in 2007 and she approved its decision to award damages.
Critics said the case should not have been settled by private arbitration, since public money was at stake in the bank, which was part-owned by the state.
The settlement Bernard Tapie received is believed to be a far greater sum than he would likely have received from the courts.
In an interview in January, Christine Lagarde stood by her decision, saying it was “the best solution at the time”.
Christine Lagarde replaced the disgraced IMF head Dominique Strauss-Kahn, who was arrested in New York in 2011 on allegations of attempted rape.
Dominique Strauss-Kahn’s lawyers settled a civil case for an undisclosed sum and a criminal investigation was dropped by US prosecutors last year.
However, Christine Lagarde’s position at the IMF could be in jeopardy if she is placed under formal investigation.
Christine Lagarde’s term as IMF chief does not expire until 2016, but amid the complexities of Europe’s economic crisis this is a distraction she can ill afford.
Bernard Tapie case
1993: Credit Lyonnais bank handles sale of Adidas, in which Bernard Tapie is a majority stakeholder
1993-2007: Court battle drags on as Bernard Tapie claims Credit Lyonnais undervalued the sale and that he was cheated following the winding-up of the once publicly-owned bank
2007: Bernard Tapie, a former Socialist, switches to support Nicolas Sarkozy in the presidential election. Christine Lagarde, Nicolas Sarkozy’s finance minister, intervenes in the Tapie case to order binding arbitration
2008: Special panel of judges rules Bernard Tapie should receive damages of 285 million euros (400 million after interest added)
2011: Public prosecutor recommends judicial investigation into her actions
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