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IMF Chief Lagarde Goes on Trial over French Payout Case

By on December 12, 2016

International Monetary Fund chief Christine Lagarde arrives at the special Paris court, France, Monday, Dec. 12, 2016. Lagarde is due to appear in a special court Monday when the trial opens in the case which dates to her time as French finance minister in 2008. The trial is due to last until Dec. 20. (AP Photo/Thibault Camus)

International Monetary Fund chief Christine Lagarde arrives at the special Paris court, France, Monday, Dec. 12, 2016. (AP Photo/Thibault Camus)

PARIS – International Monetary Fund chief Christine Lagarde went on trial Monday in a Paris court, accused of negligence for allowing a huge handout to a well-connected businessman when she was in the French government.

Poised and serious, Lagarde took notes as the judge summed up the years-long legal saga that led to charges against her – charges she contests. A well-respected pioneer for women in leadership, Lagarde faces up to a year in prison if convicted.

A lawyer for Lagarde, Patrick Maisonneuve, pleaded for a delay in the proceedings, arguing that it doesn’t make sense for her to face trial while a separate investigation in the broader case is still underway. It is unclear whether the judges will decide Monday on the appeal or adjourn for deliberations.

The case revolves around a 403 million-euro ($425 million) payout to tycoon Bernard Tapie in an arbitration deal in 2008 over the botched sale of sportswear maker Adidas in the 1990s, when Lagarde was finance minister. The amount of the award prompted indignation in France.

Investigators suspect that the whole process was rigged in favor of Tapie, a business magnate with close connections with political circles, including then-President Nicolas Sarkozy.

Civil courts have since quashed the unusually generous award, declared the arbitration process and deal fraudulent and ordered Tapie to pay the money back.

Lagarde is accused of “serious negligence” that allegedly allowed other people in the case to commit a suspected major misappropriation of public funds.

Investigating judges say Lagarde committed a series of serious errors when she made the arbitration choice and also, later on, when she refused to challenge the deal, suggesting she may have been influenced by the political connections between Tapie and Sarkozy, according to court documents.

“Ms. Lagarde’s behavior proceeds not only from a questionable carelessness and precipitation, but also from a conjunction of faults which, by their nature, number and seriousness, exceed the level of mere negligence,” the judges wrote at the end of their investigation.

At Monday’s trial in the Court of Justice of the Republic, a special court for government ministers, Lagarde was asked to declare her identity, age, address, professional activity and salary. She answered: $450,000 a year.

Maisonneuve said on Europe-1 radio that Lagarde, then a government minister, was just following instructions from her administration, and didn’t have time to read all 15 years of legal files in the case.

The trial is due to last until Dec. 20.

Separately, a criminal investigation into the case is still ongoing. In that case, Tapie, his lawyer, one of the arbitrators and Lagarde’s chief of staff at the ministry, Stephane Richard, now the CEO of the telecom company Orange, were given criminal charges of gang-related fraud, and police searched Lagarde’s Paris home. Tapie later got another charge of misappropriation of funds.

Lagarde’s trial and possible conviction may raise concern about her ability to remain the head of the IMF. The Washington-based institution’s credibility was already shaken when her predecessor, Dominique Strauss-Kahn, also a French citizen, was forced to resign amid sexual assault allegations in 2011.

The IMF’s board has so far supported Lagarde at all stages of the French legal proceedings, which began the month after her appointment in July 2011.

Lagarde, the first woman to become finance minister of a Group of Eight country and to be appointed IMF chief, has said she is taking time off her day job during her trial.

Unusually, Lagarde was sent to trial by investigating judges even though prosecutors argued the case should be dropped. The prosecutors in her trial will be the same as those who made the dismissal plea, which will help Lagarde’s lawyers in the upcoming proceedings.

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