IMF head facing probe

Christine Lagarde.
Christine Lagarde.

PARIS — IMF chief Christine Lagarde will be questioned by a French magistrate tomorrow over her role in a ‚285 million arbitration payment made to a supporter of former president Nicolas Sarkozy.

Lagarde risks being placed under formal investigation at the hearing for her 2007 decision as Sarkozy’s finance minister to use arbitration to settle a long-running court battle between the state and high-profile businessman Bernard Tapie.

Under French law, that step would mean there exists “serious or consistent evidence” pointing to probable implication of a suspect in a crime. It is one step closer to trial but a number of such investigations have been dropped without any trial.

Such a move could prove uncomfortable for the International Monetary Fund, whose former head, Frenchman Dominique Strauss-Kahn, quit in 2011 over a sex assault scandal, and for a woman who has been voted the most influential in France by Slate magazine.

Lagarde is not accused of financially profiting herself from the 2007 payout and has denied doing anything wrong by opting for an arbitration process that enriched Tapie.

However a court specialising in cases involving ministers is targeting her for complicity in the misuse of funds because she overruled advisers to seek the settlement.

“The (IMF’s) board is comfortable that she did not profit from this herself. For now it is not a concern,” a source close to the board said, adding that it could reconsider that position if judicial procedures took Lagarde away from her duties.

Lagarde, herself a former lawyer and based in Washington since taking the IMF helm, said last month she was perfectly happy to go to Paris to answer questions about the Tapie affair. Her lawyer has played down the hearing as routine. (Reuters)

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