News / Europe

IMF's Lagarde Appears in Court for French Arbitration Case

IMF chief Christine Lagarde (L) arrives to be questioned by a French magistrate in Paris, May 23, 2013.IMF chief Christine Lagarde (L) arrives to be questioned by a French magistrate in Paris, May 23, 2013.
x
IMF chief Christine Lagarde (L) arrives to be questioned by a French magistrate in Paris, May 23, 2013.
IMF chief Christine Lagarde (L) arrives to be questioned by a French magistrate in Paris, May 23, 2013.
TEXT SIZE - +
Reuters
— IMF chief Christine Lagarde was questioned in court by a French magistrate on Thursday over her role in a 285-million-euro [$366 million] arbitration payment made to a supporter of former president Nicolas Sarkozy.

Lagarde risks being placed under formal investigation at the hearing for her 2007 decision as Sarkozy's finance minister to use arbitration to settle a long-running court battle between the state and high-profile businessman Bernard Tapie.

Under French law, that step would mean there exists “serious or consistent evidence” pointing to probable implication of a suspect in a crime. It is one step closer to trial, but a number of such investigations have been dropped without any trial.

Such a move could prove uncomfortable for the International Monetary Fund, whose former head, Frenchman Dominique Strauss-Kahn, quit in 2011 over a sex assault scandal, and for a woman rated the most influential in France by Slate magazine.

“It's a pleasure to see you,” a smiling Lagarde said to reporters as arrived at the Paris court with her lawyer for a hearing that could last into Friday.

They were not expected to emerge until the end of the day's proceedings, which could run into late evening. The decision on whether to place her under investigation or give her “supervised witness” status will be announced at the end of the hearing.

The case goes back to 1993 when Tapie, a colorful and often controversial character in the French business and sports world, sued the state for compensation after selling his stake in sports company Adidas to then state-owned bank Credit Lyonnais.

Also a one-time Socialist minister who later supported the conservative Sarkozy, Tapie said the bank defrauded him after it resold the stake for a much higher sum. Credit Lyonnais, now part of Credit Agricole, has denied wrongdoing.

Lagarde is not accused of financially profiting herself from the payout and has denied doing anything wrong by opting for an arbitration process that enriched Tapie. With interest, the award amounted to 403 million euros.

A court specializing in cases involving ministers is targeting her for complicity in the misuse of funds, however, because she overruled advisers to seek the settlement.

Her lawyer, Yves Repiquet, told French media that Lagarde had merely approved the use of an arbitration procedure that had been decided by the state-owned holding company, Consortium de Realization, set up to take over the debts and liabilities of Credit Lyonnais when it fell into difficulty in the early 1990s.

Tapie unruffled

Sources close to the IMF board have said they are not worried by the affair and are confident Lagarde herself did not profit from it. But they added the board might review its position if judicial procedures took her away from her duties.

Tapie said on Thursday he was “delighted” the affair was being investigated. While earlier probes had found his settlement to be perfectly legal, further examination would show how justified he had been in seeking compensation, he said.

“If there had been anything untoward in the arbitration it would have come out a long time ago,” he told Europe 1 radio, adding: “None of these legal cases are to see if I am dishonest, they are to find out how much I was robbed of.”

Lagarde, tasked with moving the IMF past the Strauss-Kahn scandal, has made her mark at the Fund by taking a firm yet pragmatic stance in the austerity-versus-growth debate raging as Europe struggles to pull itself out of a long crisis.

Appointed in part for the negotiating skills she used in brokering Europe's response to the 2008-09 global financial crisis, she has shown firmness at the IMF in insisting on the need for nations to stick to budgetary rigor when possible.

Current Finance Minister Pierre Moscovici told Le Monde newspaper that Lagarde retained the support of the French government, but said that it would appeal against the arbitration award if she was placed under formal investigation.

You May Like

Photogallery Pope's Easter Prayer: Peace in Ukraine, Syria

Pontiff also calls for end to terrorist acts in Nigeria, violence in Iraq, and success in peace talks between Israelis and Palestinians More

Abdullah Holds Lead in Afghan Presidential Election

Country's Election Commission says that with half of the ballots counted, former FM remains in the lead with 44 percent of the vote More

Russia-Ukraine Crisis Could Trigger Cyber War

As tensions between Kyiv and Moscow escalate, so too has frequency of online attacks targeting government, news and financial sites More

Featured Videos

Your JavaScript is turned off or you have an old version of Adobe's Flash Player. Get the latest Flash player.
Ukraine, Russia, United in Faith, Divided in Politicsi
X
Michael Eckels
April 19, 2014
There is a strong historical religious connection between Russia and Ukraine. But what role is religion playing in the current conflict? In the run-up to Easter, Michael Eckels in Moscow reports for VOA.
Video

Video Ukraine, Russia, United in Faith, Divided in Politics

There is a strong historical religious connection between Russia and Ukraine. But what role is religion playing in the current conflict? In the run-up to Easter, Michael Eckels in Moscow reports for VOA.
Video

Video Face of American Farmer is Changing

The average American farmer is now 58 years old, and farmers 65 and older are the fastest growing segment of the population. It’s a troubling trend signaling big changes ahead for American agriculture as aging farmers retire. Reporter Mike Osborne says a new report from the U.S. Census Bureau is suggesting what some of those changes might look like... and why they might not be so troubling.
Video

Video Donetsk Governor: Ukraine Military Assault 'Delicate But Necessary'

Around a dozen state buildings in eastern Ukraine remain in the hands of pro-Russian protesters who are demanding a referendum on self-rule. The governor of the whole Donetsk region is among those forced out by the protesters. He spoke to VOA's Henry Ridgwell from his temporary new office in Donetsk city.
Video

Video Drones May Soon Send Data From High Seas

Drones are usually associated with unmanned flying vehicles, but autonomous watercraft are also becoming useful tools for jobs ranging from scientific exploration to law enforcement to searching for a missing airliner in the Indian Ocean. VOA’s George Putic reports on sea-faring drones.
Video

Video New Earth-Size Planet Found

Not too big, not too small. Not too hot, not too cold. A newly discovered planet looks just right for life as we know it, according to an international group of astronomers. VOA’s Steve Baragona has more.
Video

Video Copts in Diaspora Worry About Future in Egypt

Around 10 percent of Egypt’s population belong to the Coptic faith, making them the largest Christian minority in the Middle East. But they have become targets of violence since the revolution three years ago. With elections scheduled for May and the struggle between the Egyptian military and Islamists continuing, many Copts abroad are deeply worried about the future of their ancient church. VOA religion correspondent Jerome Socolovsky visited a Coptic church outside Washington DC.
Video

Video Critics Say Venezuelan Protests Test Limits of Military's Support

During the two months of deadly anti-government protests that have rocked the oil-rich nation of Venezuela, President Nicolas Maduro has accused the opposition of trying to initiate a coup. Though a small number of military officers have been arrested for allegedly plotting against the government, VOA’s Brian Padden reports the leadership of the armed forces continues to support the president, at least for now.
Video

Video More Millenials Unplug to Embrace Board Games

A big new trend in the U.S. toy industry has more consumers switching off their high-tech gadgets to play with classic toys, like board games. This is especially true among the so-called millenial generation - those born in the 1980's and 90's. Elizabeth Lee has more from an unusual café in Los Angeles, where the new trend is popular and business is booming.
Video

Video Google Buys Drone Company

In its latest purchase of high-tech companies, Google has acquired a manufacturer of solar-powered drones that can stay in the air almost indefinitely, relaying broadband Internet connection to remote areas. It is seen as yet another step in the U.S. based Web giant’s bid to bring Internet to the whole world. VOA’s George Putic reports.
AppleAndroid