Head of IMF arrested and accused of sexual assault

[Magda Hassan]

Hmmmmm

Christine Lagarde faces inquiry over €285m payout for Sarkozy ally

Judge orders investigation into controversial decision made by new IMF chief in 2007 when she was French finance minister

Angelique Chrisafis in Paris guardian.co.uk, Thursday 4 August 2011 16.01 BST

A French court has ordered a formal investigation into whether the IMF head Christine Lagarde abused her position when she was finance minister in allowing a huge state settlement to a businessman friend of President Nicolas Sarkozy.

The court of justice of the republic, a special tribunal qualified to judge ministers, ruled there were grounds to examine Lagarde's role in arbitrating in favour of the controversial tycoon Bernard Tapie in 2008.

Tapie, the former owner of the football club Olympic Marseille and Socialist minister, served a seven-month jail term in 1997 for match-fixing and has a tax fraud conviction. In recent years he has made a remarkable public comeback as an actor, singer, chatshow host and prominent supporter of the president.

The Largarde investigation concerns a decades-long legal dispute Tapie had with a former state-owned bank which he claimed cheated him when handling the 1993 sale of his Adidas sports empire.

In 2007, Lagarde ended the dispute by ordering a special panel of judges to arbitrate an out-of-court settlement.

They ruled that Tapie should receive €285m (£247m) in damages from the public purse, a ruling that scandalised opposition politicians.

A judicial inquiry will now examine Lagarde's decision to order arbitration instead of letting the Tapie affair be decided by the courts. It will also consider whether she refused expert advice to appeal against the huge payout, simply allowing Tapie to walk away with his cheque.

The French inquiry into Lagarde is likely to drag on for years and could cast a shadow over her leadership of the IMF. At the end of the investigation, judges will decide whether she should face trial. Lagarde has denied any misconduct in the case.

Lagarde, a lawyer who was one of Sarkozy's most popular ministers, took over leadership of the IMF in Washington on 5 July after the former head, Dominique Strauss-Kahn, resigned amid allegations he attempted to rape a New York hotel maid.

Lagarde's lawyer, Yves Repiquet, immediately issued a statement saying the French judicial inquiry would not affect her IMF duties. "This procedure is in no way incompatible with the current functions of the managing director of the IMF," he said.

The statement was supported by a similar comment from the IMF board, which said: "It would not be appropriate for the board to comment on a case that is currently before the French judiciary. However, the board is confident that she will be able to effectively carry out her duties as managing director."

IMF head Lagarde's flat searched in Bernard Tapie probe

Christine Lagarde denies any misconduct
Continue reading the main story

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French police have searched the Paris apartment of IMF chief Christine Lagarde, as they investigate her role in awarding financial compensation to businessman Bernard Tapie in 2008.
As finance minister, she referred his long-running dispute with bank Credit Lyonnais to an arbitration panel, which awarded him 400m euros (£340m) damages.
Mr Tapie was a supporter of ex-President Nicolas Sarkozy.
Critics say she abused her authority but Ms Lagarde denies any wrongdoing.
"This search will help uncover the truth, which will contribute to exonerating my client from any criminal wrongdoing," Ms Lagarde's lawyer, Yves Repiquet, told the Reuters news agency.
The BBC's Christian Fraser in Paris says investigators suspect Mr Tapie was granted a deal in return for his support of President Sarkozy in the 2007 election.
There is speculation in France that Ms Lagarde could yet be placed under formal investigation in this case, he adds.
The origins of the case date back 20 years.
Continue reading the main story

Bernard Tapie case

• 1993: Credit Lyonnais bank handles sale of Adidas, in which Bernard Tapie is a majority stakeholder
  
• 1993-2007: Court battle drags on as Mr Tapie claims Credit Lyonnais undervalued the sale and that he was cheated following the winding-up of the once publicly-owned bank
  
• 2007: Mr Tapie, a former Socialist, switches to support Nicolas Sarkozy in the presidential election. Ms Lagarde, Mr Sarkozy's finance minister, intervenes in the Tapie case to order binding arbitration
  
• 2008: Special panel of judges rules Mr Tapie should receive damages of 285m euros (400m after interest added)
  
• 2011: Public prosecutor recommends judicial investigation into her actions
  

Mr Tapie, who has long been active in French business, sporting and political circles, sued Credit Lyonnais over its handling of the sale in 1993 of sportswear brand Adidas, in which he was a majority stakeholder.
After years in the courts, the case was referred by Ms Lagarde to an arbitration panel in 2007 and she approved its decision to award damages.
Public money Critics said the case should not have been settled by private arbitration, since public money was at stake in the bank, which was part-owned by the state.
The settlement Mr Tapie received is believed to be a far greater sum than he would likely have received from the courts.
In an interview in January, Ms Lagarde stood by her decision, saying it was "the best solution at the time".
Ms Lagarde replaced the disgraced IMF head Dominique Strauss-Kahn, who was arrested in New York in 2011 on allegations of attempted rape.
Mr Strauss-Kahn's lawyers settled a civil case for an undisclosed sum and a criminal investigation was dropped by US prosecutors last year.
However, our correspondent says that Ms Lagarde's position at the IMF could be in jeopardy if she is placed under formal investigation.
Her term as IMF chief does not expire until 2016, but amid the complexities of Europe's economic crisis this is a distraction she can ill afford, he adds.
http://www.bbc.co.uk/news/world-europe-21858531