IMF’s Lagarde ordered to stand trial in France

Lagarde stands charged with negligence related to an approximately $440.7 million payment to Bernard Tapie, part of a 2008 arbitration agreement between Tapie and the French bank, Credit Lyonnais.

As finance minister, Lagarde made a decision to refer the dispute to an arbitration panel in 2007 that ultimately awarded Tapie more than 400 million euros ($441 million) in compensation.

Friday’s ruling means Lagarde will go before a special tribunal that hears cases against government ministers accused of wrongdoing in the discharge of their duties.

The ruling is a blow to Lagarde, who has always been touted as a potential future French president.

Tapie left France and settled in Belgium after the award and transferred his funds out of France but a French court in June said he should pay all of the money back.

“I am convinced that the court will find the allegations of negligence to be without merit”, he said in a statement.

He could also face a criminal trial on fraud charges, which would be separate from the Lagarde trial.

However, the trial is an embarrassment for the American-based International Monetary Fund after former head Dominique Strauss-Kahn was forced to quit in 2011 amid sexual assault allegations.

International Monetary Fund (IMF) director Christine Lagarde, left, is greeted by Zhou Xiaochuan, governor of the People’s Bank of China, right, at the 1+6 Roundtable on promoting growth in the Chinese and global economies at the Diaoyutai State Guesthouse in Beijing, China, Friday, July 22, 2016. Crédit Lyonnais had allegedly defrauded Tapie in 1993 and 1994 when it sold Adidas on his behalf to Robert Louis-Dreyfus, apparently by arranging a larger sale with Dreyfus without Tapie’s knowledge.

A Paris appeals court has ordered Tapie to reimburse the state, but the colourful businessman has lodged an appeal, which is still pending.

Lagarde has denied any wrongdoing or that she acted on orders from then-president Nicolas Sarkozy, of whom Tapie was a supporter.

Ms Lagarde said she had a “clear conscience”. With the court battle still ongoing in 2007, Lagarde intervened in her capacity as economy minister, and ordered that the dispute should go to binding arbitration.