Lagarde to be tried for tycoon’s payout

THE head of the International Monetary Fund (IMF), Christine Lagarde, was ordered yesterday to stand trial over her handling of a large state payout to French tycoon Bernard Tapie when she was minister of finance.

Ms Lagarde was placed under formal investigation last year for allegedly being negligent in a protracted legal drama pitting Mr Tapie against a bank that he accused of defrauding him during his sale of Adidas in the 1990s.

She was finance minister under former French president Nicolas Sarkozy in 2008 when she decided to allow arbitration in the dispute between Mr Tapie and partly stateowned Credit Lyonnais.

The arbitration resulted in Mr Tapie, who had close ties to Mr Sarkozy, being awarded a payout of €403m, which would have to be covered by a state-run body in charge of settling the bank’s debts.

French prosecutors in September called for the case against Ms Lagarde to be dropped. However, investigating judges decided to send her to trial, a legal source said yesterday.

The negligence charge comes over Ms Lagarde’s failure to challenge the award, which was hugely beneficial to Mr Tapie but prejudicial to the state.

Investigating judges are probing whether the arbitration was a “sham” organised to reward Mr Tapie for his support of Mr Sarkozy.

Ms Lagarde has consistently denied wrongdoing or that she acted on Mr Sarkozy’s orders.

In a statement yesterday she said she would fight the trial order, describing the decision as “difficult to understand”.

Ms Lagarde said she had “always acted in the interests of the state and the law”.

The arbitration decision was clouded in scandal and was overturned in February after years of court proceedings.

Mr Tapie was ordered to pay back the money at the beginning of this month.

“I am ruined. Ruined. Absolutely on ruined street. I haven’t got a thing,” Mr Tapie said after the decision.

The flamboyant Mr Tapie, who served a prison sentence for match-fixing during his time as the president of France’s biggest football club, Marseille, bought Adidas in the early 1990s.

However he decided to sell it shortly afterwards to concentrate on his political career, putting the sale in the hands of Credit Lyonnais, a state-run bank that has since been privatised.

Adidas was resold in 1994 for a substantially higher sum and floated on the French stock exchange in 1995, leading Mr Tapie to claim that the bank had failed to act in his interests.