IMF chief Lagarde to face financial deal probe

August 4th, 2011 - 9:18 pm ICT by IANS  

London, Aug 4 (IANS) A French court is to probe International Monetary Fund’s new head Christine Lagarde for abuse of authority while she was France’s finance minister.

Lagarde is accused of wrongly pressing a bank to enter binding arbitration over a dispute with a businessman who supported President Nicolas Sarkozy’s election campaign, BBC reported.

Lagarde has denied any misconduct. There is no suggestion she profited personally.

An investigation within the bureaucratic French legal system could take months or even years.

Lagarde’s lawyer Yves Repiquet says the decision would not affect the IMF chief’s work.

“This procedure is in no way incompatible with the current functions of the managing director of the IMF,” he said.

The Court of Justice of the Republic, a special body with the power to judge ministers, made the decision to probe after meeting for several hours to discuss a preliminary inquiry.

Prosecutors allege Lagarde abused her authority by approving a 285 mn euros ($406 mn) payment to businessman Bernard Tapie, a former left-wing minister who switched sides to support Sarkozy in the 2007 presidential election.

At that time Tapie was in the midst of a court battle with the former state-owned bank Credit Lyonnais. He alleged the bank had defrauded him in the 1990s, when he sold a stake in the sports clothing business Adidas.

The businessman had lost the case in the country’s highest court but was appealing against the decision.

Few months later, the new Finance Minister, Lagarde, overruled objections from her officials and intervened in the judicial case, pushing the bank and Tapie into binding arbitration, the BBC report stated.

Lagarde took over as IMF managing director from Dominique Strauss-Kahn in July, following his arrest in May on charges of the attempted rape of a New York hotel maid.

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