IMF chief loses appeal, to stand trial in France

Christine Lagarde, managing director of the International Monetary Fund (IMF), speaks during a Bloomberg Television interview at the Federal Reserve in New York, U.S., on Monday, July 18, 2016.
Christine Lagarde, managing director of the International Monetary Fund (IMF), speaks during a Bloomberg Television interview at the Federal Reserve in New York, U.S., on Monday, July 18, 2016.

PARIS -- France's top court has ruled that International Monetary Fund chief Christine Lagarde must stand trial in France over a 2008 arbitration ruling that handed $439 million to a politically connected business magnate.

Lagarde, who was French finance minister at the time of the deal in favor of tycoon Bernard Tapie, is accused of negligence in the case. She has denied wrongdoing.

A special court ruled in December that Lagarde should stand trial, but she appealed. France's Court of Cassation on Friday rejected the appeal.

Patrick Maisonneuve, and attorney for Lagarde, expressed disappointment at the decision, but told The Associated Press he expects the trial to show that the IMF chief did nothing wrong.

"I am convinced that the court will find the allegations of negligence to be without merit," Maisonneuve told Bloomberg News.

While the threat of a trial has clouded her tenure at the IMF, she was given a second five-year term as managing director in February.

The IMF executive board "continues to express its confidence in the managing director's ability to effectively carry out her duties," spokesman Gerry Rice said in an emailed statement.

The unusually generous 2008 arbitration deal, paid from public funds, prompted years of legal disputes that remain unresolved.

The investigation began in 2011, just before Lagarde was named to head the IMF, and soon after sexual assault allegations against her predecessor, French economist Dominique Strauss-Kahn.

The decision last year to send her to trial came as a surprise because a prosecutor had earlier argued that the case against her should be dropped.

"Negligence" by a person invested with public authority carries a risk of up to a year in prison and a $16,500 fine.

She will be tried at the Court of Justice of the Republic, a special body that tries government ministers for alleged wrongdoing while in office. A date has not been set for the trial.

The case is part of a larger legal saga centering on Tapie, a flamboyant magnate and TV star who had sued French bank Credit Lyonnais for its handling of the sale of his majority stake in sportswear company Adidas in the mid-1990s. With Lagarde's approval, a private arbitration panel ruled that he should get $439 million in compensation, including interest.

The deal was seen by critics as a sign of a too-close relationship between magnates and the French political elite. Tapie was close to then-President Nicolas Sarkozy, Lagarde's boss.

In a separate part of the case, Tapie has been ordered to pay back the entire $439 million. An appeals decision is pending. He could also face a criminal trial on fraud charges, which would be separate from the Lagarde trial.

Stephane Bonifassi, a criminal lawyer in the French capital, who's not involved in the case, expects her job won't be jeopardized even though there might be a debate.

"Being accused of negligence in handling public funds when at the head of an organization that regularly lectures states" on how they should handle government money "is a bit contradictory," Bonifassi said ahead of the ruling.

Lagarde is the first woman to lead the IMF, which was conceived during World War II to coordinate international monetary policy and lend to countries facing balance-of-payments shortfalls. The managing director is selected by the fund's 24 executive directors, who represent its 189 member nations.

Information for this article was contributed by Angela Charlton and Philippe Sotto of The Associated Press and by Gaspard Sebag of Bloomberg News.

Business on 07/23/2016

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