IMF chief Christine Lagarde has been put under formal
investigation by French magistrates for negligence in a political fraud affair
dating from 2008 when she was finance minister. Lagarde, who this week was
questioned by magistrates in Paris for a fourth time under her existing status
as a witness in the long-running saga, said she would contest the decision.
Under French law, magistrates place someone under formal
investigation when they believe there are indications of wrongdoing, but that
does not always lead to a trial. Lagarde's lawyer, Yves Repiquet, told Reuters
he would appeal the magistrates' decision and so the matter would not prevent
Lagarde from doing her job at the head of the International Monetary Fund in
the meantime.
The inquiry relates to allegations tycoon Bernard Tapie, a
supporter of conservative ex-president Nicolas Sarkozy, was improperly awarded
403 million euros ($531 million) in an arbitration to settle a dispute with now
defunct, state-owned bank Credit Lyonnais. The inquiry has already embroiled
several of Sarkozy's cabinet members and France Telecom CEO Stephane Richard,
who was an aide to Lagarde when she was Sarkozy's finance minister.
In previous rounds of questioning, Lagarde has not
recognized as her own the pre-printed signature to sign off on a document
facilitating the payment. However Richard has stated that Lagarde was fully
briefed on the matter.
The offence of negligence by a person charged with public
responsibility in France carries a maximum penalty of one year's imprisonment
and a 15,000-euro fine.
Lagarde was a star in Sarkozy's cabinet and well-respected
by peers, pushing through many of the high-profile initiatives in France's
presidency of the G20 group of nations. She has been managing director of the
IMF since 2011 after her predecessor at the IMF, Frenchman Dominique
Strauss-Kahn, resigned over sexual assault charges that were later dropped.
A spokesman said last year the global lender's board had
discussed possible consequences of the Tapie case and determined that she would
still be able to lead the fund. Investigators are trying to determine whether
Tapie's political connections played a role in the government's decision to
resort to arbitration that won him a huge pay-out. He has denied any
wrongdoing.
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