IMF chief to stand trial over Tapie payout

International Monetary Fund chief Christine Lagarde was ordered yesterday to stand trial over her handling of a massive state payout to French tycoon Bernard Tapie when she was finance minister.

when she was finance minister.

Lagarde was placed under formal investigation in 2014 for negligence in a protracted legal drama pitting Tapie against a bank which he accused of defrauding him during his sale of Adidas in the 1990s.

The 59-year-old Frenchwoman was finance minister under former president Nicolas Sarkozy in 2008 when she decided to allow arbitration in the dispute between Tapie and partly state-owned Credit Lyonnais.

The arbitration resulted in Tapie, who had close ties to Sarkozy, being awarded a payout of 403 million euros ($433 million), 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 Lagarde to be dropped, however investigating judges decided to send her to trial, a legal source told AFP yesterday.

The negligence charge comes over Lagarde's failure to challenge the award that was hugely beneficial to Tapie but prejudicial to the state.

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

Lagarde has consistently denied wrongdoing or that she acted on Sarkozy's orders.

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

Critics of Lagarde's decision to send the Tapie case to arbitration say that, even if there was no shady motive, she should not have run the risk of the state being forced to pay compensation to a convicted criminal who was bankrupt at the time.

The scandal is not the first to taint the top office of the financial institution.

Its former French chief Dominique Strauss-Kahn was forced to step down in 2011 after being accused of sexual assault by a New York hotel maid.