IMF managing director Christine Lagarde has gone on trial in France for negligence over a compensation payment made by a state-owned bank to Bernard Tapie in 2008.
As finance minister of then-President Nicolas Sarkozy, Christine Lagarde approved an award of €404 million ($429 million) to Bernard Tapie for the disputed sale of a company.
Bernard Tapie had supported Nicolas Sarkozy in the 2007 presidential election.
Christine Lagarde, 60, is accused of allowing the misuse of public funds, rather than corruption. She denies wrongdoing.
The case originates in the early 1990s, when Bernard Tapie was a majority shareholder in sports goods company Adidas.
After launching a political career and becoming a cabinet minister in Francois Mitterrand’s Socialist government in 1992, Bernard Tapie had to sell the company.
In 1993, Tapie sued Credit Lyonnais, a state-owned bank that handled the sale, alleging that the bank had defrauded him by deliberately undervaluing the firm.
By 2007, the long-running case was referred by Christine Lagarde to binding arbitration. A three-member panel awarded the compensation a year later, causing a public outcry.
In 2015, after eight more years of legal wrangling, a French court ruled that Bernard Tapie had not been entitled to compensation and should repay the €404 million.
Christine Lagarde is now facing the Court of Justice of the Republic (CJR) on charges of “negligence by a person in position of public authority”.
The court, composed mostly of politicians rather than judges, handles allegations of crimes committed by cabinet ministers. If convicted, she could face one year in prison.
Christine Lagarde replaced Dominique Strauss-Kahn as IMF managing director in 2011.
DSK – also a former French finance minister – resigned following his arrest in New York on charges of assault that were later dropped.