French court opens case against IMF's Christine Lagarde

A French court has opened an investigation into the International Monetary Fund’s new chief, Christine Lagarde, over charges that she abused her authority as a minister in allegedly helping a friend of President Nicolas Sarkozy win a 400-million-euro payout from public funds.

Reuters/Philippe Wojazer

Prosecutors want to know why Lagarde, in 2007 when she was France’s Finance Minister, called in private arbitrators when Bernard Tapie accused the Crédit Lyonnais bank, which was state-owned at the time, of mishandling the sale of the Adidas sportswear group.

She could have fought the case in court, they say, pointing out that the country’s top appeals court had come down on the state's side in 2006.

Arbitration rules were also changed to allow 45 million euros to be paid out for retributory damages alone, they say, and Lagarde then dropped the case, despite officials’ advice that the ministry should appeal.

The French government paid out 400 million euros in damages and, after tax and stoppages, Tapie ended up 210 million euros.

France’s Socialist Party, which raised the alarm over the case, claims that the settlement was a quid pro quo for Tapie, who was once a minister in Socialist President François Mitterrand’s government, backing Sarkozy in the 2007 presidential election.

"This confirms what the Socialist Party has said all along," Socialist MP Jean-Marc Ayrault told RFI. "It calls into question Mrs Lagarde’s decision to call for private arbitration which only served Mr Tapie’s interests."

And, he adds, "could not have acted had she not been authorised, or perhaps even coerced, by the president".

Lagarde denies the charges and has refused to resign from the IMF’s top job.

Tapie is now involved in a legal dispute with another businessman, André Guelfi.

He promised to halve the settlement with Guelfi while he was in prison for fixing a football match between Valenciennes and Olympique de Marseille, which he owned at the time, according to the muckraking weekly Le Canard Enchaîné.