• IMF chief avoids charges in French payout scandal

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    PARIS: International Monetary Fund (IMF) chief Christine Lagarde avoided immediate charges Friday but was named an “assisted witness” after French prosecutors grilled her for two days over a state payout to a disgraced tycoon when she was finance minister.

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    Lagarde was questioned for a total of 24 hours by prosecutors working for a court that probes cases of ministerial misconduct over her 2007 handling of a row that resulted in 400 million euros ($515 million) being paid to controversial business figure Bernard Tapie.

    While Lagarde avoided being placed under formal investigation—the closest equivalent in French law to being charged—her “assisted witness” status means she could still face further questions—and possibly charges—at a later stage.

    Lagarde said she would now return to Washington and report to the board of the IMF, which again expressed confidence in its first woman leader after learning of the court’s decision.

    The investigation concerns Tapie, a former politician, who went to prison for match-fixing during his time as president of French football club Olympique de Marseille.

    Prosecutors working for the Court of Justice of the Republic (CJR) suspect he received favorable treatment in return for supporting Nicolas Sarkozy in the 2007 presidential election.

    They have suggested Lagarde—who at the time was finance minister—was partly responsible for “numerous anomalies and irregularities” which could lead to charges for complicity in fraud and misappropriation of public funds.

    The investigation centers on her 2007 move to ask a panel of judges to arbitrate in a dispute between Tapie and Credit Lyonnais, the collapsed, partly state-owned bank, over his 1993 sale of sports group Adidas.

    Tapie had accused Credit Lyonnais of defrauding him by consciously undervaluing Adidas at the time of the sale and argued that the state, as the former principal shareholder in the bank, should compensate him.

    His arguments were upheld by the arbitration panel but critics claimed the state should not have taken the risk of being forced to pay compensation to a convicted criminal who, as he was bankrupt at the time, would not have been able to pursue the case through the courts.

    The payment Tapie received enabled him to clear his huge debts and tax liabilities and, according to media reports, left him with 20 million to 40 million euros which he has used to relaunch his business career.

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