International Monetary Fund Managing Director Christine Lagarde has been put under formal investigation for her role in an arbitration case during her time as French finance minister.
Lagarde, who has no plans to step down from her post at the IMF, will convene a meeting of the board of the multilateral body to explain the situation, an IMF official said, declining to be indentified, in line with the organization’s internal policy. Her lawyer Yves Repiquet could not immediately be reached for comment.
As finance minister, Lagarde in 2008 decided to allow arbitration to end a dispute between Bernard Tapie, a businessman and supporter of then President Nicolas Sarkozy, and former state-owned bank Credit Lyonnais.
Lagarde, who was put under formal investigation today for “negligence” by the Cour de Justice de la Republique, has denied any wrongdoing, saying it was the best option for the state.
The court has been looking into whether she erred in agreeing to arbitration to end the dispute that resulted in the business tycoon being awarded him about $500 million.
Tapie, a businessman, who has also dabbled in politics and acting, won the 385 million-euro ($507 million) arbitration award to settle a dispute over his company’s sale of German sportswear brand Adidas AG.
He contended that Credit Lyonnais mishandled the 1993 sale and pursued a claim against the bank’s liquidator.
Tapie, a minister for less than a year under former Socialist President Francois Mitterrand in the 1990s, endorsed Sarkozy’s successful presidential effort in 2007 and failed re- election bid in 2012.
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