Lagarde probed over ‘negligent’ role in Sarkozy scandal

IMF boss Christine Lagarde’s potentially negligent role in a Nicolas Sarkozy scandal is being formally investigated by a French court, the FT reports.

In 2008, when Lagarde was finance minister in the government of former president Sarkozy, a controversial businessman was awarded €400m to settle a commercial dispute against a partly state-owned bank.

Former Adidas owner Bernard Tapie had supported Sarkozy in his 2007 election and there were claims that his favourable result in the commercial arbitration process was railroaded due to his earlier donations.

At the time, Lagarde referred the case to an arbitration panel of three judges. Now a French court is formally investigating her to determine whether she was guilty of negligence.

Lagarde has argued her innocence in the past and refutes having any inappropriate hand in the arbitration.

Speaking to the FT, Lagarde’s spokesman says she is under formal examination on suspicion of “simple negligence” following 15 hours’ questioning by the Court of Justice of the Republic. She has not been charged. 

It is the fourth time she has appeared before the court for the matter.

The minor charge has a maximum penalty of one year’s imprisonment and a fine of €15,000.

Lagarde intends to appeal the court’s move and says she will not resign from the IMF.