IMF chief Christine Lagarde formally accused of negligence by French fraud investigators

 

Paris

The IMF chief Christine Lagarde has vowed to fight a formal accusation that she “acted negligently” and permitted an alleged €400m fraud when she was French finance minister in 2008.

The accusation – although comparatively weak – is a serious embarrassment for the IMF director general and for France.

The last head of the International Monetary Fund, Dominique Strauss-Kahn, was forced to resign from the world body in 2011 after he was accused of attempted rape in New York. The charge was later dropped. Allegations of wrongdoing against Ms Lagarde were already under investigation when she was selected to replace Mr Strauss-Kahn. At the time, both she and the then French government gave assurances that the case would come to nothing.

Ms Lagarde, 58, was today “mis en examen”, or placed under formal investigation, by a special French court which deals with alleged offences by ministers while in office. The accusation – one step short of an actual charge – is that Ms Lagarde acted negligently in failing to block an unjustified €403m out-of-court settlement of an interminable lawsuit against the French state by the business tycoon Bernard Tapie.

Several other people, including a judge and Stéphane Richard, now head of France Telecom, then head of Ms Lagarde’s private office, have already been formally accused of “conspiracy to commit fraud”. After four tough interrogations of Lagarde, including one which ended at midnight last night, the committee of magistrates investigating the affair decided that there is a prima facie case that she acted negligently in public office.

If eventually charged and found guilty – both far from certain – Ms Lagarde could face a one-year prison sentence and a €15,000 fine.

French business tycoon Bernard Tapie French business tycoon Bernard Tapie (EPA)
In an indignant statement today, Ms Lagarde said that she would vigorously contest the “completely unfounded” allegations. “After three years of investigation, and dozens of hours of questioning, the committee [of magistrates] has acknowleged that I was guilty of no fraud,” she said. “They have been reduced to accusing me of not being sufficiently vigilant.”

After previous interrogations last year, Ms Lagarde was declared a key witness in the case, rather than someone suspected of an offence. Her change in status seems to have been based partly on her own previous claims that she was kept in the dark about key facts and that, on one occasion, a letter was signed in her name without her knowledge.

Two sets of investigating magistrates are examining evidence that a €403m pay-off to Mr Tapie in 2008 by a private arbitration panel was the result of a conspiracy instigated by President Nicolas Sarkozy’s private office in the Elysée Palace. Mr Sarkoy – who is protected from investigation by his presidential immunity – is suspected of promising to engineer a sweetheart settlement for his friend Mr Tapie.

Ms Lagarde, who had only recently been appointed finance minister at the time, has been cleared of any suspicion of involvement in the alleged conspiracy. She is accused instead of negligently failing to prevent it.

The saga goes back more that 20 years to 1992 when Mr Tapie briefly entered politics. He asked the state-owned bank, Crédit Lyonnais, to sell his sportswear company, Adidas. The bank declared that it had achieved his minimum price of the equivalent of €470m but allegedly sold Adidas to itself through off-shore companies and made a €400m profit.

It also broke another business agreement with Mr Tapie, pushing him into bankruptcy and making it impossible for him to sue them. Shortly afterwards, Crédit Lyonnais almost went into bankruptcy. Mr Tapie was jailed for offences including the bribery of footballers.

For 15 years, until the controversial 2008 settlement, Mr Tapie pursued a claim against the agency of the French state which assumed responsibility for the debts of Crédit Lyonnais.

Start your day with The Independent, sign up for daily news emails
ebooks
ebooksA celebration of British elections
Voices
Ed Miliband and David Cameron are neck and neck in the polls
election 2015Armando Iannucci: on how British politics is broken
News
i100
Life and Style
Great minds like Einstein don't think alike
tech
Arts and Entertainment
Billie Piper as Brona in Penny Dreadful
tvReview: It’s business as usual in Victorian London. Let’s hope that changes as we get further into the new series spoiler alert
Life and Style
A nurse tends to a recovering patient on a general ward at The Queen Elizabeth Hospital in Birmingham
health
News
science
Arts and Entertainment
No Offence
tvReview: No Offence has characters who are larger than life and yet somehow completely true to life at the same time spoiler alert
News
Chuck Norris pictured in 1996
people
Arts and Entertainment
Sarah Lucas, I SCREAM DADDIO, Installation View, British Pavilion 2015
artWhy Sarah Lucas is the perfect choice to represent British art at the Venice Biennale
News
A voter placing a ballot paper in the box at a polling station
i100
News
people
  • Get to the point
Latest stories from i100
Have you tried new the Independent Digital Edition apps?
Independent Dating
and  

By clicking 'Search' you
are agreeing to our
Terms of Use.

iJobs Job Widget
iJobs General

Ashdown Group: IT Support Engineer - Leeds

£22000 - £25000 per annum: Ashdown Group: IT Support Engineer - Leeds This i...

SThree: Trainee Recruitment Consultant - Bristol

£18000 - £23000 per annum + Uncapped OTE: SThree: SThree Trainee Recruitment C...

SThree: Trainee Recruitment Consultant - Birmingham

£18000 - £23000 per annum + Uncapped OTE: SThree: SThree Trainee Recruitment C...

SThree: Trainee Recruitment Consultant - Dublin

£13676.46 - £16411.61 per annum + OTE: SThree: SThree Trainee Recruitment Cons...

Day In a Page

General Election 2015: Ed Miliband's unlikely journey from hapless geek to heart-throb

Miliband's unlikely journey from hapless geek to heart-throb

He was meant to be Labour's biggest handicap - but has become almost an asset
General Election 2015: A guide to the smaller parties, from the the National Health Action Party to the Church of the Militant Elvis Party

On the margins

From Militant Elvis to Women's Equality: a guide to the underdogs standing in the election
Amr Darrag: Ex-Muslim Brotherhood minister in exile still believes Egypt's military regime can be replaced with 'moderate' Islamic rule

'This is the battle of young Egypt for the future of our country'

Ex-Muslim Brotherhood minister Amr Darrag still believes the opposition can rid Egypt of its military regime and replace it with 'moderate' Islamic rule, he tells Robert Fisk
Why patients must rely less on doctors: Improving our own health is the 'blockbuster drug of the century'

Why patients must rely less on doctors

Improving our own health is the 'blockbuster drug of the century'
Sarah Lucas is the perfect artist to represent Britain at the Venice Biennale

Flesh in Venice

Sarah Lucas has filled the British pavilion at the Venice Biennale with slinky cats and casts of her female friends' private parts. It makes you proud to be a woman, says Karen Wright
11 best anti-ageing day creams

11 best anti-ageing day creams

Slow down the ageing process with one of these high-performance, hardworking anti-agers
Juventus 2 Real Madrid 1: Five things we learnt, including Iker Casillas is past it and Carlos Tevez remains effective

Juventus vs Real Madrid

Five things we learnt from the Italian's Champions League first leg win over the Spanish giants
Ashes 2015: Test series looks a lost cause for England... whoever takes over as ECB director of cricket

Ashes series looks a lost cause for England...

Whoever takes over as ECB director of cricket, says Stephen Brenkley
Fishing for votes with Nigel Farage: The Ukip leader shows how he can work an audience as he casts his line to the disaffected of Grimsby

Fishing is on Nigel Farage's mind

Ukip leader casts a line to the disaffected
Who is bombing whom in the Middle East? It's amazing they don't all hit each other

Who is bombing whom in the Middle East?

Robert Fisk untangles the countries and factions
China's influence on fashion: At the top of the game both creatively and commercially

China's influence on fashion

At the top of the game both creatively and commercially
Lord O’Donnell: Former cabinet secretary on the election and life away from the levers of power

The man known as GOD has a reputation for getting the job done

Lord O'Donnell's three principles of rule
Rainbow shades: It's all bright on the night

Rainbow shades

It's all bright on the night
'It was first time I had ever tasted chocolate. I kept a piece, and when Amsterdam was liberated, I gave it to the first Allied soldier I saw'

Bread from heaven

Dutch survivors thank RAF for World War II drop that saved millions
Britain will be 'run for the wealthy and powerful' if Tories retain power - Labour

How 'the Axe' helped Labour

UK will be 'run for the wealthy and powerful' if Tories retain power