IMF chief to stand trial for Tapei payout

International Monetary Fund chief Christine Lagarde has been ordered to stand trial over her handling of a massive state payout to French tycoon Bernard Tapie during her time as finance minister, a legal source said on Thursday.

Ms Lagarde was placed under formal investigation in 2014 for negligence in the long-running affair for allowing arbitration in a dispute between the tycoon and partly state-owned bank Credit Lyonnais.

Mr Tapie accused Credit Lyonnais of defrauding him by undervaluing Adidas when he sold the sports goods company in 1993.

The arbitration resulted in Mr Tapie, who had close ties to former President Nicolas Sarkozy, being awarded a payout of 403 million euros ($433 million), which would have to be covered by a state-run body in charge of settling the bank’s debts.

The decision was clouded in scandal and was overturned in February after years of court proceedings. Mr Tapie was ordered to pay back the money at the beginning of December.

Investigating judges have probed whether the arbitration was a “sham” organised to reward Mr Tapie for his support of Mr Sarkozy.

The IMF chief has consistently denied having acted on the former President’s orders. Ms Lagarde said in a statement that she would fight the trial order.

Meanwhile the IMF’s executive board, representing 188 member nations, “continues to express its confidence in the managing director’s ability to effectively carry out her duties,” spokesperson Gerry Rice said in a statement.

The scandal is not the first to taint the top office of the financial institution.