IMF director Lagarde to be questioned in Paris

Lagarde criticised for handing of financial settlement when French finance minister

IMF director Christine Lagarde faces questioning about a 2008 decision, taken against the advice of her staff when she was France’s finance minister, to order an out-of-court settlement to the conflict between Crédit Lyonnais and businessman Bernard Tapie. Photograph: Reuters/Brendan McDermid

IMF director Christine Lagarde faces questioning about a 2008 decision, taken against the advice of her staff when she was France’s finance minister, to order an out-of-court settlement to the conflict between Crédit Lyonnais and businessman Bernard Tapie. Photograph: Reuters/Brendan McDermid

Fri, Apr 19, 2013, 06:50

International Monetary Fund director Christine Lagarde, a former French finance minister, is to be questioned next month by the Court of Justice of the Republic (CJR), a special tribunal which handles cases involving high-ranking officials, in connection with a €403 million settlement awarded to Bernard Tapie, a controversial businessman with close ties to the former French president Nicolas Sarkozy.

“Ms Lagarde will at last have the opportunity to provide to the commission (of the CJR) the details and explanations that will clear her of all criminal responsibility,” said her lawyer, Yves Repiquet.

The IMF chief could be placed under formal investigation, her lawyer added. Two separate inquiries are examining whether Ms Lagarde abused her power as finance minister, used false documents and misused public funds in her handling of the financial dispute between the ruined Crédit Lyonnais bank and Mr Tapie. Possible charges against her could carry a maximum 10-year prison sentence and €150,000 in fines.

Médiapart, the investigative website which last month brought down the budget minister Jérôme Cahuzac for tax fraud, reported that Ms Lagarde will appear before the CJR on May 23rd. It predicted “a new politico-judiciary earthquake in France” as well as “an earthquake at the IMF and, yet again, after the storm provoked by the pitiful fall of Dominique Strauss-Kahn, a tremor that will tarnish the image of France”. The IMF was informed of procedures involving Ms Lagarde before she was appointed to replace Mr Strauss-Kahn in July 2011.

In 2008, Ms Lagarde acted against the advice of her staff in ordering an out-of-court settlement to the conflict between Crédit Lyonnais and Mr Tapie, saying it was time to end the costly decades-long dispute. Ms Lagarde said Mr Tapie would receive “only” some €30 million after payment of debts and taxes. But Mr Tapie is reported to have received up to €300 million of the €403 million settlement.

Mr Tapie, who once served as a socialist cabinet minister, was the owner of the Olympic Marseille football club. He served seven months in jail for match-fixing in 1997 and has a tax fraud conviction. He saw Mr Sarkozy six times in 2007, and 12 times after Mr Sarkozy’s election in 2008, according to L'Express magazine.

Crédit Lyonnais had sold the Adidas sports equipment company on Mr Tapie's behalf in 1993. Médiapart yesterday published a document which it says “establishes clearly that Christine Lagarde deliberately chose a procedure . . . knowing in advance that it was contrary to the interests of the state and of taxpayers. This note confirms that Christine Lagarde committed major errors in Bernard Tapie’s favour.”

Ms Lagarde ignored recommendations that she appeal the settlement. The French court of auditors ruled that proper judiciary procedures had not been followed, and the impartiality of the arbiters, one of whom was in contact with Mr Sarkozy, is in question.

Médiapart says Mr Sarkozy “apparently wanted to thank Christine Lagarde, who followed his instructions in the Tapie scandal” by supporting her candidacy for the IMF.