IMF chief Lagarde loses appeal and must stand trial over payout scandal

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France’s top court has ruled that IMF head Christine Lagarde, must stand trial over a state payout in 2008. Lagarde will now face a special French tribunal for ministers accused of wrongdoing in office.

The highest appeals court in France denied an appeal from International Monetary Fund (IMF) chief Christine Lagarde on Friday, ruling that she must stand trial for her role in a 404 million euro ($445 million) state payout to business tycoon Bernard Tapie in 2008.

Lagarde was France’s finance minister at the time and stands accused of negligence in the case.

Her lawyer, Patrick Maisonneuve said he regretted the decision, but felt assured that the trial will prove Lagarde was innocent.

Shortly after the court’s decision, the IMF released a statement saying it has confidence in its leader.

“The executive board has been briefed on recent developments relating to this matter, and continues to express its confidence in the managing director’s ability to effectively carry out her duties,” IMF spokesman Gerry Rice said.

Friday’s ruling means that 60-year-old Lagarde will be tried in the Law Court of the Republic, which handles cases concerning offences committed by sitting government ministers.

Lagarde has maintained that she acted in France’s best interests during the case.

Tapie payout scandal

Prosecutors say that Lagarde improperly allowed a rare out-of-court arbitration in a dispute between Tapie, a political supporter of former French president Nicolas Sarkozy, and a state-owned bank.

In 2008, Tapie walked away with hundreds of millions of euros in compensation, after Lagarde settled a long-running row over the sale of sporting goods giant Adidas through arbitration. In a separate case, Tapie has been ordered to reimburse the state for the payout, but an appeal is still pending.

Lagarde could face a year in jail if she is convicted, as well as a fine of 15,000 euros.

Despite the case against her, Lagarde was appointed in January for a second five-year term as managing director of the IMF.

rs/kl (AP, AFP, dpa, Reuters)

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