IMF Head in Court in Fraud Probe 05/23 07:23
International Monetary Fund chief Christine Lagarde is facing questions at a
special Paris court Thursday over her role in the 400 million euro ($520
million) pay-off to a controversial businessman when she was France's finance
PARIS (AP) -- International Monetary Fund chief Christine Lagarde is facing
questions at a special Paris court Thursday over her role in the 400 million
euro ($520 million) pay-off to a controversial businessman when she was
France's finance minister.
The court hearing threatens to sully the reputations of both Lagarde and
France. The payment was made to well-connected entrepreneur Bernard Tapie as
part of a private arbitration process to settle a dispute with state-owned bank
Credit Lyonnais over the botched sale of Adidas in the 1990s. It is seen by
many in France as an example of the cozy relationship between big money and big
power in France.
Lagarde has earned praise for her negotiating skills as managing director of
the IMF through Europe's debt crisis and is seen as a trailblazer for women
leaders. Her decision to let the Adidas dispute go to private arbitration
rather than be settled in the courts has drawn criticism, and French lawmakers
asked magistrates to investigate.
Lagarde, smiling at reporters, left her Paris apartment Thursday morning and
appeared at a special court that handles cases involving government ministers.
She has denied wrongdoing.
At the time of the payment, Tapie was close to then-French President Nicolas
Sarkozy, who was Lagarde's boss. Critics have said 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.
Investigators opened an inquiry in 2011 into possible charges of "complicity
to embezzlement of public funds" and "complicity to forgery." The probe may not
result in a trial. If it does, and if Lagarde were to be convicted, she could
face up to 10 years in prison, according to prosecutors.
The dispute over the Adidas deal had been dragging through French courts for
years, and one question for Lagarde is why the government didn't let the courts
continue to battle it out.
"What she is being criticized for today is taking the disputes between the
bank, Mr. Tapie and the French state out of the national court system and
submitting them to three private arbitrators, who decided basically behind
closed doors how to resolve the dispute," said Christopher Mesnooh, a lawyer
from Field Fisher Waterhouse in Paris who is not connected to the case.
Lagarde and the Washington-based IMF were aware of the probe when she took
over as managing director of the fund from Dominique Strauss-Kahn in 2011. The
IMF has expressed its confidence in Lagarde throughout the investigation.
In March, French investigators searched Lagarde's Paris home. Her lawyer
said at the time that she welcomed the search as a step toward proving her
French Finance Minister Pierre Moscovici told Le Monde newspaper this week
that the government may seek to annul the arbitration deal if enough evidence
emerges of wrongdoing.
Tapie --- a flashy tycoon and former football club owner who has also tried
his hand as an actor, singer and government minister --- insists that he
deserved the settlement. He says the investigation into the deal is "bogus," a
politically motivated hunt by the governing Socialists against Sarkozy's
conservatives. Tapie himself may be targeted in a separate probe.
"Lagarde's fate doesn't concern me," Tapie said on Europe-1 radio Thursday.
"When evidence is discovered, then we'll talk."