A French court ordered an investigation today into the role of International Monetary Fund (IMF) head Christine Lagarde in a huge settlement paid to a businessman friend of president Nicolas Sarkozy when she was finance minister.
The Court of Justice of the Republic, a special tribunal qualified to judge ministers, announced its decision after meeting for several hours to examine the results of a preliminary inquiry by a judiciary panel.
Ms Lagarde, who replaced Dominique Strauss-Kahn as managing director of the International Monetary Fund last month, has denied any misconduct in her approval of a €285 million payment to Bernard Tapie to settle a long-running legal dispute with a former state-owned bank.
Mr Tapie, a former left-wing government minister who switched sides to support Mr Sarkozy’s 2007 presidential campaign, had lost the case in 2006 before France’s highest court and was appealing the decision when Mr Sarkozy won power.
Ms Lagarde overruled objections from some ministry officials to drop the judicial case and pressed ahead with the arbitration, arguing it was needed to resolve the long-running case swiftly. There is no suggestion she profited personally in any way from the final settlement.
Yves Repiquet, a lawyer for Ms Lagarde, said she had received the news calmly and even with relief, following months of speculation over whether a complaint brought by opposition Socialists over the case would end up in an inquiry.
The lawyer said the French judicial investigation should not affect her duties at the fund, adding in a statement after the court's announcement: "This procedure is in no way incompatible with the current functions of the managing director of the IMF."
Ms Lagarde has denied any misconduct in her approval of the €285 million arbitration payout to Mr Tapie in 2008 to end a long-running legal dispute with a former state-owned bank.
Ms Lagarde, who was a high-flying corporate lawyer before joining the French government, is tasked with turning the page at the IMF after her predecessor Mr Strauss-Kahn quit after being charged with trying to rape a New York hotel maid.
She could now be called for questioning by the investigating judges in a process that could run
on for months or even years.
Reuters