IMF chief Lagarde to appear in court over long-running fraud case

23 Dec 2015 | Author: | No comments yet »

IMF chief Lagarde faces trial in France.

PARIS – International Monetary Fund chief Christine Lagarde has been ordered to stand trial in France over her role in a 2008 arbitration ruling that handed 400 million euros ($434 million) to French businessman Bernard Tapie. Lagarde, who was French finance minister at the time, denied wrongdoing in a statement Thursday and said she had ordered her lawyers to appeal the decision. The case against her will be heard by magistrates at the Cour de justice de la Republique — which judges ministers for crimes in office, France’s prosecutor general confirmed. The decision came despite the prosecutor’s recommendation in September that investigations be dropped against Ms Lagarde for alleged negligence in the affair while she was France’s finance minister.

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. Ms Lagarde’s lawyer, Yves Repiquet, said he would be recommending that she appeal against the decision, which would bring her to court over an affair that dates back more than 20 years. “It’s incomprehensible,” Mr Repiquet said on French TV channel iTele. “I will recommend Lagarde appeal this decision.” While Ms Lagarde was finance minister, Mr Tapie won French government compensation after selling his stake in sports company Adidas to Credit Lyonnais in 1993.

The trial concerns a Lagarde’s 2008 decision to allow an arbitration process to end a dispute between Tapie, a supporter of then French President Nicolas Sarkozy, and former state-owned bank Credit Lyonnais. But the Court of Justice of the Republic on Thursday has decided that she has a case to answer, according to a spokesman at the court, which is a special body for trials of government ministers. 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. The spokesman did not have details of the lengthy written decision, and could not say exactly which charges were retained and therefore how much prison time, or fines, she might face, if convicted. Earlier this month, a French court dismissed Mr Tapie’s demand for a further payout of over a billion euros, ordering him instead to pay back the original compensation.

At the fund’s annual meeting in Lima in October, Lagarde said she’d be open to serving another term. “The Executive Board continues to express its confidence in the Managing Director’s ability to effectively carry out her duties,” IMF spokesman Gerry Rice said. “The Board will continue to be briefed on this matter” Lagarde took over as head of the IMF in 2011 when Dominique Strauss-Kahn resigned after a hotel maid accused him of sexual assault. Prosecutors dropped a criminal case amid inconsistencies in her testimony; Strauss-Kahn reached an Lagarde is the first woman to lead the IMF, which was conceived during World War II to coordinate international monetary policy and lend to countries facing balance-of-payments shortfalls.

Critics say the deal was too generous to Tapie at the expense of the French state, and that the case shouldn’t have gone to a private arbitration authority because it involved a state-owned bank.

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