BBC — IMF chief Christine Lagarde has gone on trial in France for negligence over a compensation payment made by a state-owned bank to a businessman in 2008.
As finance minister of then-President Nicolas Sarkozy, she approved an award of €404m to Bernard Tapie for the disputed sale of a firm.
Mr Tapie had supported Mr Sarkozy in the 2007 presidential election.
She is accused of allowing the misuse of public funds, rather than corruption. She denies wrongdoing.
The case originates in the early 1990s, when Mr 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, Mr Tapie had to sell the company.
In 1993, he 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 Ms Lagarde to binding arbitration. A three-member panel awarded the compensation a year later, causing a public outcry.
Last year, after eight more years of legal wrangling, a French court ruled that Mr Tapie had not been entitled to compensation and should repay the €404m.
Ms Lagarde, 60, is now facing the Court of Justice of the Republic (CJR) on charges of “negligence by a person in position of public authority”.
Ms Lagarde was sent to trial by CJR magistrates even though prosecutors had argued that the case should be dropped. The trial is due to last until 20 December.
“I would like to show you that I am in no way guilty of negligence, but rather that I acted in good faith with only the public interest in mind,” Christine Lagarde said in the opening hearing.
Investigators have said that Lagarde’s behavior in the case went beyond simple carelessness.
Her trial is only the fifth to be held before the Cour de Justice de la Republique, a special tribunal created in 1993 to try cabinet ministers.
A panel of 15, including 12 lawmakers from both the lower and upper houses of parliament, will hear the case, which is scheduled to run until Dec. 20.
They are expected to focus on correspondence between Lagarde and her staff as well as the government body that manages state corporate holdings, which advised against private arbitration.
If convicted, Ms Lagarde could face one year in prison.
She replaced Dominique Strauss-Kahn as IMF managing director in 2011.
Mr Strauss-Kahn – also a former French finance minister – resigned following his arrest in New York on charges of sexual assault that were later dropped.
1993: Credit Lyonnais bank handles sale of Adidas to enable tycoon to pursue ministerial career under then Socialist President Francois Mitterrand
1993-2007: Mr Tapie claims Credit Lyonnais undervalued Adidas and that he was cheated; lengthy court battle ensues
1994: Bernard Tapie’s highly indebted group collapses and is wound up by Credit Lyonnais
2007: Mr Tapie supports conservative Nicolas Sarkozy in presidential election. Finance Minister Christine Lagarde intervenes in Tapie case to order binding arbitration
2008: Special judicial panel rules Mr Tapie should receive damages of €404m; Ms Lagarde decides not to challenge ruling
2011: Public prosecutor recommends investigation into Ms Lagarde’s decision to order arbitration
2013: Ms Lagarde questioned by magistrate and her home searched. Mr Tapie under investigation.
2014: Ms Lagarde is cleared of the most serious charges of corruption, but investigated on charges of negligence
2015: Appeals court orders Mr Tapie to pay back €404m with interest
