Christine Lagarde in court over €400m payout to French tycoon

IMF chief goes on trial accused of negligence after approving settlement for Bernard Tapie - she denies any wrongdoing

(Charles Platiau/Reuters)

International Monetary Fund (IMF) chief Christine Lagarde has pledged to fight “allegation by allegation” charges of negligence having gone on trial in Paris over her role in a huge payout by the French state to businessman Bernard Tapie in 2008.

Ms Lagarde, 60, was France's finance minister in the government of then-president Nicolas Sarkozy when she approved an out-of-court settlement with Mr Tapie to end a long-running dispute between the magnate and the French state.

The decision to accept an extremely rare private arbitration ended up costing French taxpayers more than €400m (£335m) in a payout to Mr Tapie.

Accused of negligence leading to misuse of public funds, Ms Lagarde denies any wrongdoing. She risks up to a year in jail and a fine of €15,000 if convicted.

Were it to happen, a maximum sentence could raise questions about the widely respected policymaker's ability to continue as head of the Washington-based IMF, where her French predecessor Dominique Strauss Kahn quit in 2011 over a sex assault scandal.

“I would like to show you that I am in no way guilty of negligence, but rather that I acted in good faith with only the public interest in mind,” she said in the opening hearing.

“Was I negligent? No. And I will strive to convince you allegation by allegation,” she said, expressing surprise at the harsh tone of the charges against her.

Investigators have said that Ms Lagarde's behaviour in the case went beyond simple carelessness.

A lawyer for Ms Lagarde, Patrick Maisonneuve, pleaded for a delay in the proceedings, arguing that it doesn't make sense for her to face trial while a separate investigation in the broader case involving Mr Tapie is still underway. However, the court decided to proceed.

Ms Lagarde’s trial is only the fifth to be held before the Cour de Justice de la Republique, a special tribunal created in 1993 to try cabinet ministers.

At Monday's trial Ms Lagarde was asked to declare her identity, age, address, professional activity and salary. She answered: £355,000 a year.

A panel of 15, including 12 legislators from both the lower and upper houses of parliament, will hear the case, which is scheduled to run until Dec. 20.

They are expected to focus on correspondence between Ms Lagarde and her staff as well as the government body that manages state corporate holdings, which advised against private arbitration.

Mr Maisonneuve said on Europe-1 radio that Ms Lagarde, then a government minister, was just following instructions from her administration, and didn't have time to read all 15 years of legal files in the case.

The case dates back to a time when Mr Tapie sued the state for compensation after selling his stake in sports company Adidas to then state-owned Credit Lyonnais in 1993.

He accused the bank of allegedly defrauding him after it resold its stake for a much higher price. With the case stuck in the courts, the two sides agreed to a private settlement and Mr Tapie was awarded a €400m payout, including interest.

Reuters