BRUSSELS, BELGIUM (EBS) – IMF chief Christine Lagarde goes on trial on Monday (December 9) for her role in a 400 million euro ($425 million) state payout to businessman Bernard Tapie in 2008 when she was France’s finance minister.
The case has cast a rare shadow over Lagarde, who is widely respected in policy circles for helping the International Monetary Fund turn the page after her predecessor Dominique Strauss-Kahn resigned in 2011 facing sex assault charges.
Lagarde, 60, is accused of negligence for signing off on a highly unusual out-of-court settlement between the state and Tapie, a colourful French businessman with connections to then-president Nicolas Sarkozy.
A guilty verdict risks plunging the IMF into a new leadership crisis after Strauss-Kahn’s shock departure.
“She is very determined to defend herself step by step, she will be present at the trial despite the scale of her role as Director General of the IMF but she will be there to answer questions, to explain herself, she is truly determined and ready to show that these accusations of negligence exist only in the mind of the investigating magistrates,” he lawyer Patrick Maisonneuve told Reuters on Friday (December 9).
The IMF’s board, which gave her a new five-year mandate earlier this year, has said it stands behind its chief.
The case goes back to when Tapie sued the state for compensation after selling his stake in sports company Adidas to Credit Lyonnais in 1993.
He said the bank, owned by the French state at the time, had defrauded him after it later resold its stake for a much higher sum.
Tapie subsequently received 403 million euros in a settlement that was largely borne by the tax-payer.
Maisonneuve said that the charge against Lagarde assumed that there had been negligence which had lead to an embezzlement of public money, but that the embezzlement case itself remained to be adjudicated.
“There are other problems. First of all the problem of the very existence of embezzlement of public money, whereas that is an ongoing legal affair involving Mr Tapie and others including notably one of the arbitrators, Mr Estou. So I get the impression they’re trying to deal with this case a little hastily even though the fundamental question of the embezzlement of public money hasn’t even be adjudicated on — far from it,” he said.
The trial will be only the fifth heard before the Cour de Justice de la Republique, a special tribunal created in 1993 to try cases involving ministers.
Maisonneuve said the file had been largely dealt with by Lagarde’s chief of staff Stephane Richard, now the chief executive of French telecoms group Orange, and that he had failed to pass on some necessary information.
In focus will be correspondence from the government body that manages the state’s corporate holdings. It has said it opposed the idea of settling out of court, while Lagarde’s lawyer says she followed the agency’s instructions.
Richard, who faces a separate investigation for his role, has been called as a witness by the prosecution. He says he gave Lagarde all the information required and carried out her decisions in good faith.
The verdict, which can be appealed, is likely to come at the end of hearings due to run until December 20, a judicial official said.