A French court is to investigate newly-appointed International Monetary Fund chief Christine Lagarde for suspected 'aiding and abetting falsification' and 'misappropriation of public funds' in her handling of a huge compensation payout awarded to controversial French businessman Bernard Tapie while she was finance minister. Michel Deléan reports (see also links to Mediapart's investigations and reporting of the Lagarde case on Page 2).
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The decision on Thursday to open an investigation into Christine Lagarde's suspected 'aiding and abetting falsification' and 'misappropriation of public funds' when finance minister was reached after a five-hour debate - described by one judicial source to Mediapart as being "quite lively" - among the seven magistrates who make up the Petitions Committee of France's Court of Justice of the Republic (CJR).
The case centres on newly-appointed IMF chief Lagarde's management of the procedure that led to a 403 million-euro payout from the public purse to businessman Bernard Tapie in 2008. Lagarde has denied any misconduct.
Tapie, a twice-fold rags-to-riches entrepreneur, is also a former centre-left politician and minister during the presidency of François Mitterrand who campaigned for conservative right Nicolas Sarkozy's election as president in 2007.
The CJR is the French court designated to investigate suspected malpractice by government members in the course of their duties, and to judge them if charges are brought. The decision on Thursday now formally transfers the case to the CJR's Investigation Committee, made up of a panel of independent magistrates.
Their investigation will decide whether Lagarde, 55, should be tried by the court or, on the contrary, whether there is insufficient evidence for charges. If she does stand trial, she will be judged by a CJR committee made up mostly of Members of Parliament.
The investigation now launched is likely to be a lengthy one because of both the complexity and volume of evidence in the case and the traditional slowness of the CJR's formal procedures.
"An investigation could take a very long time, one could expect it to take several years as there would be a lot of witnesses to interview, among them Madame Lagarde, who could also be investigated as a suspect," Virginie Duval, general secretary of France's USM magistrates union, told Reuters television.
Lagarde, based in Washington since her appointment as IMF managing director on June 28th, could be questioned either in the US or France. Before that, the magistrates must decide whether Lagarde should be formally placed ‘under investigation' - mis en examen -, which under French law is one step short of being charged, or whether she will be questioned as an ‘assisted witness'.
The events leading up to Thursday's decision to open an investigation were set in train on May 10th, when Jean-Louis Nadal, France's most senior public prosecutor before his retirement in June, referred the case to the CJR. His report detailed suspicions over the role of Lagarde and several senior civil servants in pushing through the private arbitration procedure that ensured the huge payout to Tapie, ending his longstanding dispute with a state agency handling the liabilities of the former Crédit Lyonnais bank.
Nadal's conclusions were largely based on a damning report by the French national audit office, la Cours des comptes, (Court of Accounts), dated October 2010, and which was revealed exclusively by Mediapart in May, which highlighted a series of anomalies in Lagarde's handling of the case, notably the highly surprising decision not to appeal the judgment by an arbitration tribunal.
That award, paid out of public funds, ended a longstanding legal battle until then played out in courts of law. It centred on Tapie's alleged spoliation by the former state-owned bank Crédit Lyonnais during its mandated sell-off of Tapie's business interests, notably his controlling share of the Adidas sportswear and accessory company, in the early 1990s.
Tapie's claim for damages was brought against the Consortium de Réalisation (CDR), the French government entity responsible for the liabilities of the defunct bank which collapsed following a high-risk lending scandal in 1993.
One of the key questions is why Lagarde pursued the decision of her predecessor, Jean-Louis Borloo, a close friend of Tapie for whom he once served as a lawyer, to remove the case from the justice courts and opted for a private arbitration procedure that was highly favourable for Tapie. The decision to drop the legal fight and enter into arbitration was taken immediately after President Sarkozy's election in May 2007, when Borloo was appointed, for a one-month period, finance minister. Lagarde succeeded him in June 2007. The move was made despite an October 9th 2006 plenary meeting of magistrates at the Cour de cassation, France's highest court, had reached a judgment in the case that was considered to be in the interests of the CDR and, by consequence, the state.
In a statement issued shortly after the CJR's decision to open an investigation, Lagarde's lawyer Yves Repiquet insisted that Lagarde's situation would not interfere with her functions as IMF chief. "This procedure is in no way incompatible with the current functions of the managing director of the IMF," the statement read. Repiquet said he was certain that the magistrates' enquiries will conclude that the case should be dismissed.
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See below for more of Mediapart's exclusive investigations and reports on the Christine Lagarde-Bernard Tapie case:
French prosecutor finds evidence that Lagarde 'obstructed law' in Tapie case
Conflict of interest' delays Lagarde probe decision
Exclusive: the secret report that could scupper Lagarde's bid to lead IMF
The sting in the tail of Tapie and the Crédit Lyonnais payout
Two tycoons and a secret pact to calve up millions in compensation
The Chicago gang behind Lagarde's appointment as IMF chief
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English version: Graham Tearse