Mediapart has obtained exclusive access to the scathing conclusions of a French court that prompted its decision earlier this month to open an investigation into IMF chief Christine Lagarde's suspected 'aiding and abetting falsification' and 'misappropriation of public funds' when she was French finance minister.
The case centres on newly-appointed IMF managing director Lagarde's management of the arbitration procedure that led to a 403 million-euro payout from the public purse to French businessman Bernard Tapie in 2008.
The nine-page report detailed (1) the reasons that the seven magistrates from France's Court of Justice of the Republic (CJR) decided that Lagarde should be investigated. They clearly state their suspicions that she acted personally with the sole intention of ensuring a large payout to Tapie, a flamboyant tycoon and former centre-left politician who leant public support to French President Nicolas Sarkozy's 2007 election campaign.
In the report dated August 4th, the CJR magistrates found that the management of the arbitration procedure showed "grave and concordant evidence that suggests that hidden by the apparent proper procedure of arbitration was in fact a concerted action aimed at granting, directly or indirectly, to the Tapie spouses and the companies they own, the capital, the sums they had not until then been able to obtain".
They said the payment allowed Tapie and his wife and the businesses they owned "to escape the consequences of the collective procedures of which they were the object and to constitute for themselves a large patrimony [personal wealth]".
The CJR is the French court designated to investigate suspected crimes by government members in the course of their duties, and to judge them if charges are brought. Lagarde has denied any misconduct.
The CJR investigation, which officially opened on August 16th, 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 events leading up to the decision to open an investigation were set in train in May, 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.
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1: To see the contents of the nine-page report, click on 'Prolonger' tab top of page.
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.
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.
The CJR magistrates' report of August 4th obtained by Mediapart notably concluded: "Out of all of the decisions taken [that were] systematically unfavourable to the interests of the CDR, the EFPR [the Public Establishment for Financing and Restructuring, set up to supervise the CDR] and the State, results grave and concordant evidence that suggests that hidden by the apparent proper procedure of arbitration was in fact a concerted action aimed at granting, directly or indirectly, to the Tapie spouses and the companies they own, the capital, the sums they had not until then been able to obtain, neither from the judicial courts nor through the mediation attempted in 2004, nor during a second negotiation led in 2006 following the pronouncement of the ruling of the Paris appeals court, which was also abandoned, given what was considered to be Monsieur Tapie's unacceptable expectations."
The arbitration decision "allowed the Tapie spouses and the Tapie group, which some observers judged to be in an irremediable situation as of 1992, to escape the consequences of the collective procedures of which they were the object and to constitute for themselves a large patrimony [personal wealth]."
The execution of the arbitration decision "led to the payment by the EFPR, in its title as guarantor for the CDR, of sums that, ultimately, the State would bear".
"From all of the decisions [that were] systematically unfavourable to the interests of the CDR, the EFPR and the State, results grave and concordant evidence that suggests that hidden by the apparent proper procedure of arbitration was in fact a concerted action aimed at granting, directly or indirectly, to the Tapie spouses and the companies they own, the capital, the sums they had not until then been able to obtain, neither from the judicial courts nor through the mediation attempted in 2004, nor during a second negotiation led in 2006 following the pronouncement of the ruling of the Paris appeals court, which was also abandoned, given what was considered to be Monsieur Tapie's unacceptable expectations."
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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 caseConflict of interest' delays Lagarde probe decisionExclusive: the secret report that could scupper Lagarde's bid to lead IMFThe sting in the tail of Tapie and the Crédit Lyonnais payout
Two tycoons and a secret pact to calve up millions in compensationJust who is Monsieur Borloo?The Chicago gang behind Lagarde's appointment as IMF chief------------------------English version: Graham Tearse