IMF managing director Christine Lagarde in court over money to disgraced tycoon Bernard Tapie in 2008

Former finance minister allegedly bought Tapie's support for Nicolas Sarkozy's 2007 presidential bid

The IMF chief Christine Lagarde may be formally accused of fraud tomorrow at the end of a two day grilling by a special court in France.

Ms Lagarde, 57, spent most of today answering questions in a private hearing about her role in a €403m compensation award to the disgraced tycoon, Bernard Tapie, while she was French finance minister in 2008.

The elegant, and much admired, Ms Lagarde is accused not of enriching herself, but of engineering a sweetheart settlement to Mr Tapie  to pay him off for switching sides to support the former President Nicolas Sarkozy in the 2007 presidential election.

If, as expected,  she is “mis en examen”, or placed under formal investigation for “embezzlement” by the special court tomorrow, the International Monetary Fund (IMF) will face a tricky decision on whether or not to ask her to stand down.

An IMF spokesman in Washington indicated that the organisation had no plans, at this stage, to force the resignation of a second senior French politician in two years. Lagarde's predecessor, Dominique Strauss-Kahn, resigned in May 2011 after he was accused of the attempted rape of a hotel chamber maid in New York.

Ms Lagarde is understood to have vehemently contested the allegations against her today and insisted that she acted in the best interests of the French taxpayer.  She is said by friends to be “angry” and “bemused” that she should face such allegations in France when she is supposed to be devoting all her energies to resolving the international economic crisis.

Although the case against her is far from watertight, sources suggest that the Cour de Justice de la République – a special court which tries alleged wrongdoing in office by ministers or ex-ministers – has enough prima facie evidence to order a formal and prolonged investigation. A report by the court’s chief prosecutor, leaked earlier this week, said Ms Lagarde had taken “a series of decisions systematically damaging to the interests of the State”.

Ms Lagarde was given the whole of today and part of tomorrow to contest the allegations in a closed hearing. The likelihood is, however, that she will be placed under formal investigation today – one step short of an actual charge – for “fraud” and “embezzlement of state funds”.

Mr Tapie was jailed in 1997 for offences including fixing matches for the football club he owned, Olympique Marseilles. He is a tycoon turned left-wing politician, who switched his allegiance to the centre-right candidate, Nicolas Sarkozy, in the 2007 presidential election.

In 1993, he began an interminable legal action against the French state, complaining that he had been defrauded by a state-owned bank, Crédit Lyonnais (now defunct) when it sold the sports company Adidas on his behalf .

Mr Tapie won a series of legal judgements but no agreement could be reached on compensation. In 2008, soon after she was appointed finance minister, Ms Lagarde appointed a four-man panel to short-circuit the legal arguments which proposed a €403m settlement.

Ms Lagarde says that the idea of an independent panel came not from her, but the bank’s state liquidator. In any case, she argues, it made sense to end an interminable wrangle which was also costing the state a great deal of money.

News
peopleTop Gear presenter and all-round controversialist is at it again
Sport
Aaron Ramsey celebrates after opening the scoring in Arsenal's win over Hull `
sport
News
peopleActress speaks out against historic sexual assault claims, saying things have 'gone quite far now'

Arts & Entertainment
A stranger calls: Martin Freeman in ‘Fargo’
tvReview: New 10-part series brims with characters and stories

VIDEO
Life & Style
Guests enjoy food and cocktail parings by Chefs Jimmy Bannos, Jimmy Bannos Jr, Daniel Rose and Mindy Segal with mixologists Josh King and Alex Gara at Bounty & Barrel: A Jack Daniel's Single Barrel Dinner Series at Heaven on Seven on April 9, 2014 in Chicago, Illinois.
food + drinkSprinkle Palcohol 'on almost any dish' for 'an extra kick' firm says...
Arts & Entertainment
Shaun Evans as Endeavour interviews a prisoner as he tries to get to the bottom of a police cover up
tvReview: Second series comes to close with startling tale of police corruption and child abuse
Arts & Entertainment
Schwarzenegger winning Mr. Universe 1969
arts + entsCan you guess the celebrity from these British Pathe News clips?
News
politicsLabour launches the 'completely hollow' Easter Clegg
Sport
Luis Suarez celebrates after scoring in Liverpool's 3-2 win over Norwich
sport Another hurdle is out of the way for Brendan Rodgers' side
News
Portrait of Queen Elizabeth-II by David Bailey which has been released to mark her 88th birthday
peoplePortrait released to mark monarch's 88th birthday
Arts & Entertainment
The star of the sitcom ‘Miranda’ is hugely popular with mainstream audiences
TVMiranda Hart lined up for ‘Generation Game’ revival
Life & Style
The writer, Gerda Saunders, with her mother, who also suffered with dementia before her death
healthGerda Saunders on the most formidable effect of her dementia
Arts & Entertainment
Last, but by no means least, is Tommy Cooper and the fez. This style of hat became a permanent trademark of his act.
comedyNot Like That, Like This centres on alleged domestic abuse
Arts & Entertainment
Oxegen in Ireland has been axed as promoters decide it is 'no longer viable'
arts + ents Promoters have axed the event as it is 'no longer viable in current form'
News
The troubled star is set to give fans the biggest insight into her life away from the headlines
people Star made the announcement during the final episode of the programme, entitled Lindsay
Independent
Travel Shop
the manor
Up to 70% off luxury travel
on city breaks Find out more
santorini
Up to 70% off luxury travel
on chic beach resorts Find out more
sardina foodie
Up to 70% off luxury travel
on country retreats Find out more
Have you tried new the Independent Digital Edition iPad app?
Independent Dating
and  

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

iJobs Job Widget
iJobs General

Geography Teacher

£130 - £140 per day: Randstad Education Ilford: Secondary Geography Teacher Lo...

Do you want to work in Education?

£55 - £70 per day: Randstad Education Cheshire: Are you a dynamic and energeti...

SEN Teaching Assistant

Negotiable: Randstad Education Group: SEN TAs, LSAs and Support Workers needed...

Private Client Senior Manager - Sheffield

£50000 - £60000 per annum: Pro-Recruitment Group: The Sheffield office of this...

Day In a Page

Rubin ‘Hurricane’ Carter: The man who could have been champion of the world - and the Bob Dylan song that immortalised him

The man who could have been champion of the world

Rubin ‘Hurricane’ Carter and the Bob Dylan song that immortalised him
Didn’t she do well?

Didn’t she do well?

Miranda Hart lined up for ‘Generation Game’ revival
The Middle East we must confront in the future will be a Mafiastan ruled by money

The Middle East we must confront in the future will be a Mafiastan ruled by money

In Iraq, mafiosi already run almost the entire oil output of the south of the country
Before they were famous

Before they were famous

Can you guess the celebrity from these British Pathe News clips?
Martin Freeman’s casting in Fargo is genius

Martin Freeman’s casting in Fargo is a stroke of genius

Series is brimming with characters and stories all its own
How I brokered a peace deal with Robert Mugabe: Roy Agyemang reveals the delicate diplomacy needed to get Zimbabwe’s President to sit down with the BBC

How I brokered a peace deal with Robert Mugabe

Roy Agyemang reveals the delicate diplomacy needed to get Zimbabwe’s President to sit down with the BBC
Video of British Muslims dancing to Pharrell Williams's hit Happy attacked as 'sinful'

British Muslims's Happy video attacked as 'sinful'

The four-minute clip by Honesty Policy has had more than 300,000 hits on YouTube
Church of England-raised Michael Williams describes the unexpected joys in learning about his family's Jewish faith

Michael Williams: Do as I do, not as I pray

Church of England-raised Williams describes the unexpected joys in learning about his family's Jewish faith
A History of the First World War in 100 moments: A visit to the Front Line by the Prime Minister's wife

A History of the First World War in 100 moments

A visit to the Front Line by the Prime Minister's wife
Comedian Jenny Collier: 'Sexism I experienced on stand-up circuit should be extinct'

Jenny Collier: 'Sexism on stand-up circuit should be extinct'

The comedian's appearance at a show on the eve of International Women's Day was cancelled because they had "too many women" on the bill
Cannes Film Festival: Ken Loach and Mike Leigh to fight it out for the Palme d'Or

Cannes Film Festival

Ken Loach and Mike Leigh to fight it out for the Palme d'Or
The concept album makes surprise top ten return with neolithic opus from Jethro Tull's Ian Anderson

The concept album makes surprise top ten return

Neolithic opus from Jethro Tull's Ian Anderson is unexpected success
Lichen is the surprise new ingredient on fine-dining menus, thanks to our love of Scandinavian and Indian cuisines

Lichen is surprise new ingredient on fine-dining menus

Emily Jupp discovers how it can give a unique, smoky flavour to our cooking
10 best baking books

10 best baking books

Planning a spot of baking this bank holiday weekend? From old favourites to new releases, here’s ten cookbooks for you
Jury still out on Manchester City boss Manuel Pellegrini

Jury still out on Pellegrini

Draw with Sunderland raises questions over Manchester City manager's ability to motivate and unify his players