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Investigation

IMF chief Christine Lagarde charged in €400 million fraud case

Lagarde said that she will not resign her position and intends to return to work immediately.

IMF CHIEF CHRISTINE Lagarde has been charged with ‘negligence’ over a multi-million-euro graft case relating to her time as French finance minister.

The case relates to her handling of a €400 million state payout to French tycooon Bernard Tapie in 2008. Investigating judges suspect that the payment may have been in return for Tapie’s support of former president Nicolas Sarkozy in the 2007 election.

The payment itself was related to a dispute between Tapie and the French bank Credit Lyonnais over the businessman’s 1993 sale of sportswear group Adidas.

FRANCE SARKOZY MEDICAL RESEARCH AP / Press Association Images AP / Press Association Images / Press Association Images

Tapie had claimed that Credit Lyonnais defrauded him by intentionally undervaluing Adidas at the time of the sale and that the state, as the bank’s principal shareholder, should compensate him.

Despite the revelation, Lagarde has said that she has no intention of resigning her position as top dog at the IMF, and intends to return to work in Washington.

Lagarde’s involvement in ‘sham’

When the dispute came before then finance minister Lagarde, she referred it to a three member arbitration panel that ruled in favour of Tapie and ordered the payout, which included €45 million in ‘moral damages’.

FRANCE TAPIE AP / Press Association Images AP / Press Association Images / Press Association Images

The conduct of this arbitration panel is the focus of the investigative judges in this case, who are looking into the allegation that the cash award was a sham organised to reward Tapie for his support of Sarkozy.

Lagarde told AFP this morning:

After three years of procedure the only surviving allegation is that through inattention I may have failed to block the arbitration that put an end to the long standing Tapie litigation.

The levelling of formal charges against Lagarde marks a ramping up of her involvement in the investigation, which had hitherto regarded her a ‘special witness’, which meant she was compelled to come back for questioning when asked by the court.

The crux of the prosecutor’s case is a signature stamp used on an October 2007 letter that investigators think is crucial in determining who took the decision to resort to an arbitration panel.

Lagarde says that she was unaware of the contents of the letter and has told judges it was stamped with her signature in her absence.

Five people have also been charged in the case, including Stephane Richard, then Lagarde’s chief of staff, now boss of telecoms giant Orange.

In France, those found guilty of ‘negligence’ can be sanctioned by a year in prison and a €15,000 fine.

© – AFP 2014

Read: Investigators search home of IMF chief Christine Lagarde>

Read: IMF - Politicians should take advantage of ‘favourable’ financial market conditions>

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