The sting in the tale of Tapie and the Crédit Lyonnais payout


The controversy over the 403 million euros of public funds awarded in 2008 to French businessman Bernard Tapie in his dispute with French bank Crédit Lyonnais returned to the fore this month, lighting a fuse to a series of scandals-within-the-scandal. Laurent Mauduit reports.

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In 2008, the flamboyant French tycoon, one-time minister, multi-millionaire, bankrupt, actor and singer Bernard Tapie, was awarded 403 million euros of tax-payers' money in a private compensation settlement that ended a dispute with the former state-owned Crédit Lyonnais bank which had began in the courts 12 years earlier.

The case centred on the bank's sale of Tapie's business assets in the early 1990s, for which it was mandated by him. Also at this time, in 1993, the then state-owned Crédit Lyonnais, (now called LCL after it was privatized and bought by the Crédit Agricole), was at the centre of one of France's biggest-ever banking scandals when it became the subject of a massive public bail-out after going bankrupt through high-risk lending.

Tapie eventually launched a lawsuit against the bank which he accused of fraud after it paid him less than the true value of its sale of his controlling stake in sportswear and accessories company Adidas.

But in October 2007, five months after Nicolas Sarkozy's election, for which Tapie was notably a campaigner, the state agency responsible for managing the liabilities ofthe Crédit Lyonnais, the Consortium de Réalisation (CDR), agreed with Tapie's representatives to settle the dispute through out-of-court arbitration. The following year, the CDR reached a deal with Tapie to pay him 390 million euros, of which 40 million euros were granted for ‘moral' (personal) damages.

Out of the 403 million euros he was awarded, Tapie was also ordered to pay outstanding tax, welfare payments and other charges he owed relating to his former business interests. Once all the deductions were made, he was left with a net sum of 230 million euros.

This month, senior French public prosecutor Jean-Louis Nadal began an investigation into the legality of the arbitration procedure, after a legal move launched by opposition Socialist Party Members of Parliament. This followed evidence revealed in a report on the Tapie case by the president of parliament's finance commission.

The MPs are challenging the probity of a decision by French economy and finance minister Christine Lagarde to have the case removed from the courts, where in effect the state, in the form of the CDR, was being sued by Tapie. Her move in favour of a private three-man arbitration panel was very largely to Tapie's benefit.

In a letter addressed to Nadal, prosecutor with France's highest court of appeal, la cour de cassation, the MPs notified him that the parliamentary report revealed evidence that suggested the decision to move the case into private arbitration "had the aim of favouring personal interests to the detriment of public interest".

Nadal has already approached the finance ministry, the finance commission of parliament and the Court of Accounts (la Cour des comptes) France's national audit office, for them to hand over documentation relating to the arbitration.

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The sums awarded to Bernard Tapie, gross and net, cited in this report were corrected on May 21st according to latest information revealed by the French national audit office, the Court of Accounts. They were in fact greater than originally reported, by 13 million euros for the gross sum, and by 10 million euros for the net sum, he received.