Why IMF Boss, Lagarde Could Be Jailed

A French Court has on Friday, ordered that Christine Lagarde, director of the International Monetary Fund, IMF, tried for her role in a 400-million-euros payout in 2008 to a businessman named Bernard Tapie.

Patrick Maisonneuve her lawyer expressed regret over the decision but said he was “convinced” the trial would prove his client was innocent in the affair.

Lagarde is accused of negligence by improperly signing off on the decision to allow an extremely rare out-of-court arbitration in a dispute between Tapie, a supporter of conservative former president Nicolas Sarkozy, and the state.

The arbitration judges later ruled in Tapie’s favour and ordered the state payout to him, but appeals courts have since thrown out the settlement decision.

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

The case goes back to when Tapie had sued the state for compensation after selling his stake in sports company Adidas to Crédit Lyonnais in 1993. He claimed the bank had defrauded him after it later resold his stake for a much higher sum.

If found guilty, Lagarde could spend one year in jail.

Lagarde, who has been at the helm of the IMF since 2011, was France’s finance minister at the time of the controversial payout. The unusually generous 2008 arbitration deal, paid from public funds, prompted years of legal disputes that remain unresolved.

Despite the shadow of the case looming over her, Lagarde was appointed in January for a second five-year term as managing director of the IMF.

The global institution expressed support for its managing director, despite the charges and the pending trial in France. “The executive board has been briefed on recent developments related to this matter, and continues to express its confidence in the managing director’s ability to effectively carry out her duties,” Gerry Rice, IMF spokesman said.

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