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Lagarde faces negligence probe

August 27, 2014

French magistrates have placed IMF chief Christine Lagarde under formal investigation. They said they'd look into her alleged role in a political fraud case reaching back to her time as Finance Minister.

IMF chief Lagarde
Image: Reuters

International Monetary Fund Managing Director Christine Lagarde told AFP news agency Wednesday she'd been put under formal investigation. Her announcement came shortly after she had been grilled for a fourth time by magistrates about her role in a long-running political fraud case. The probe hinges on an alleged compensation payment.

The magistrate's decision indicates they've found signs of wrongdoing, but it does not necessarily mean Lagarde will face a full blown trial.

The case relates to her handling of a 400-million-euro ($527-million) state compensation payout to disgraced French tycoon Bernard Tapie in 2008 when she was French Finance Minister.

Ghosts of the past haunt

The payout was connected to a dispute between the businessman and partly state-owned bank Credit Lyonnais over the 1993 sale of his stake in sports equipment group Adidas.

Lagarde had referred the dispute to a three-member arbitration panel that ruled in favor of Tapie, who is suspected of receiving favorable treatment in return for supporting ex-President Nicolas Sarkozy in the 2007 election.

Lagarde told AFP she would appeal Wednesday's decision and would not resign her position as IMF chief over the investigation.

hg/bw (AFP, Reuters)