Current IMF boss in the dock over fiscal negligence

The trial opened on Monday of the leader of the International Monetary Fund, Christine Lagarde.

She is accused of negligence over a payment of €400 million to a French business tycoon when she was France’s finance minister (2007-2011).

Lagarde approved the payment from public funds to Bernard Tapie, the former owner of sportswear company Adidas and a friend of then-president Nicolas Sarkozy.

Prosecutors claim this was a misuse of public money.

For her part, Lagarde, 60, said before the hearing began that she was not negligent and had been acting “in the interest of the state”. She denied she had given Tapie favourable treatment or awarded the controversial payout on Sarkozy’s orders.

The penalty in the case of a guilty verdict at France’s Court of Justice could be one year in prison and a fine of €15,000.

As the hearing began, the IMF boss was asked if she wished to reserve her right to remain silent.

“I have no intention of keeping silent, madame la president,” she replied.

Tapie also used to own the Olympique de Marseilles football club and had been both a pop and television star.  He had accused the French bank Crédit Lyonnais of fraud by undervaluing his stake in Adidas.  After a legal battle over this lasted two decades, Lagarde took the unusual step of referring the case to private arbitration and making an out-of-court settlement.

After another lengthy court battle, he was ordered to repay the money.  He has appealed this decision.

Investigators suspect the arbitration deal was made in return for Tapie’s support for Sarkozy’s presidential bid in 2007.

Although she is not accused of personally profiting from the payment, she has been criticised for failing to challenge the award.

The case is being heard at theCourt or Justice of the Republic, a special court set up to judge ministers and public officials for crimes allegedly committed while in office. It is made up of three judges and 12 politicians from the French houses of parliament.

It is only the fifth time the court has been convened.

The IMF has not had an easy ride with its directors. Dominique Strauss-Kahn resigned as managing director to fight sexual assault charges.  Rodrigo Rato is currently on trial in Spain for fraud and the misuse of funds when he was the director of Spanish lender Bankia.

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