IMF’s Lagarde faces court in fraud probe
She is being targeted for complicity in the misuse of funds
IMF chief Christine Lagarde was questioned in court by French magistrates yesterday over her role in a €285-million arbitration payment made to a supporter of former president Nicolas Sarkozy.
Lagarde risks being placed under formal investigation at the hearing for her 2007 decision as Sarkozy’s finance minister to use arbitration to settle a long-running court battle between the state and high-profile businessman Bernard Tapie.
Under French law, that step would mean there exists “serious or consistent evidence” pointing to probable implication of a suspect in a crime. It is one step closer to trial.
Such a move could prove uncomfortable for the International Monetary Fund, whose former head, Frenchman Dominique Strauss-Kahn, quit in 2011 over a sex assault scandal, and for a woman rated the most influential in France by Slate magazine.
The case goes back to 1993 when Tapie, a colourful and controversial character in the French business and sports world, sued the state for compensation after selling his stake in sports company Adidas to then state-owned bank Credit Lyonnais.
Also a one-time Socialist minister who later supported the conservative Sarkozy, Tapie said the bank defrauded him after it resold the stake for a much higher sum. Credit Lyonnais, now part of Credit Agricole, has denied wrongdoing.
Lagarde is not accused of financially profiting herself from the payout and has denied doing anything wrong by opting for an arbitration process that enriched Tapie. With interest, the award amounted to €403 million.
However a court specialising in cases involving ministers is targeting her for complicity in the misuse of funds because she overruled advisers to seek the settlement.
Her lawyer, Yves Repiquet, told French media that Lagarde had merely approved the use of an arbitration procedure that had been decided by the state-owned holding company, Consortium de Realisation, set up to take over the debts and liabilities of Credit Lyonnais when it fell into difficulty in the early 1990s.
Sources close to the IMF board have said they are not worried by the affair and are confident Lagarde herself did not profit from it. But they added the board might review its position if judicial procedures took her away from her duties.
French government spokeswoman Najat Vallaud-Belkacem said she supposed she would be asked to quit her post if put under investigation.
“Objectively, knowing the IMF and the way these institutions work, I would tend to think that if she were placed under investigation she would probably be asked to step down,” she told BFM television.
Tapie said yesterday he was “delighted” the affair was being investigated. While earlier probes had found his settle-ment to be perfectly legal, further examination would show how justified he had been in seeking compensation, he said.