PARIS
— Christine Lagarde, the head of the International Monetary Fund, said
on Wednesday that French prosecutors had placed her under formal
investigation, in an escalation of a long-running inquiry into a murky
business affair that dates to her time as finance minister under
President Nicolas Sarkozy.
Ms.
Lagarde said in a statement through her lawyer that she was being
investigated for “simple negligence,” by the Court of Justice of the
Republic, the judicial body that is charged with investigating the
conduct of high government officials. The court in 2011 had ordered an
investigation of whether Ms. Lagarde abused her authority in a dispute
involving a multimillion-dollar payout in 2008 to a French tycoon.
Ms.
Lagarde, who has denied wrongdoing from the start, said in a statement
on Wednesday that the decision by a judicial committee to place her
under formal investigation was “totally unfounded” and that she had
instructed her lawyer to appeal.
She made the announcement a day after she was questioned for a fourth time in the investigation of her role
in 2008 during an arbitration proceeding between the government and
Bernard Tapie, a onetime cabinet minister and the former owner of the
Adidas sportswear empire. Prosecutors had assigned Ms. Lagarde the status of “assisted witness” in
the case. Placing her under formal investigation signals that
prosecutors now believe they have evidence of wrongdoing, but the charge
of negligence hardly suggests high crimes.
Negligence
by a government official that makes possible the misappropriation or
embezzlement of public funds is punishable with a maximum fine of 15,000
euros, or $19,800, and up to one year in prison.
“After
three years of investigation and dozens of hours of interrogation, the
committee concluded that I had not been guilty of any infraction,” Ms.
Lagarde said in the statement, “so it was reduced to claiming that I had
been insufficiently vigilant during the arbitration.”
In
the French legal system, a formal investigation suggests prosecutors
believe they have enough of a case that they may ultimately bring
criminal charges and trial. The reality is that many such investigations
drag on for years with no charges being filed before being dropped.
Since
1944, when the I.M.F. was conceived, the fund’s top official has been a
European, with the job alternating among Western European nations. Ms.
Lagarde took over as managing director of the fund in 2011 after her
French predecessor, Dominique Strauss-Kahn, left in disgrace amid
charges — later dismissed — that he had sexually assaulted a woman in a
New York hotel room.
Ms. Lagarde had served as Mr. Sarkozy’s finance minister from 2007 until leaving for the I.M.F.
Mr.
Tapie, who had been in a long dispute with a state-owned bank, Crédit
Lyonnais, walked away from the arbitration in 2008 with an award of more
than €400 million. Mr. Tapie had accused the bank in 1993 of bilking
him when it oversaw the sale of his stake in Adidas.
Lagarde’s Lawyer on Investigation
Yves Repiquet, a lawyer for Christine
Lagarde, the chief of the International Monetary Fund chief, discussed
an investigation by France’s Court of Justice of the Republic involving
his client.
Publish Date August 27, 2014.
Image CreditThomas Samson/Agence France-Presse — Getty Images
In
2007, the year before the award, Mr, Tapie, who had been a career
Socialist, suddenly backed Mr. Sarkozy’s center-right Union for a
Popular Movement party. The amount of the award came as a shock to many,
and the investigation that now involves Ms. Lagarde began after critics
accused Mr. Sarkozy’s government of having carried out a sham
arbitration.
Stéphane
Richard, Ms. Lagarde’s former chief of staff and currently the chief
executive of Orange, the French telecommunications giant, has already
been placed under formal investigation on “suspicion of organized fraud.”
Since
the start of the investigation, prosecutors have discovered that Mr.
Tapie and his lawyer had had an undisclosed relationship with the
chairman of the arbitration panel, Pierre Estoup, at the time the
procedure was held. All three are now under formal investigation for
possible fraud.
Prosecutors
have been trying to understand at what point Ms. Lagarde learned about
potential
irregularity in the procedure and why she did not act to stop it.
irregularity in the procedure and why she did not act to stop it.
Mr.
Tapie has always maintained that he was entitled to the money, and has
described the investigation as a politically motivated attack by the
Socialists on Mr. Sarkozy.
Prosecutors in Paris could not immediately be reached for comment.
In
a statement, the I.M.F. communications director, Gerry Rice, said Ms.
Lagarde was “now on her way back to Washington and will, of course,
brief the board as soon as possible. Until then, we have no further
comment.”
Ms.
Lagarde’s lawyer did not immediately return a request for comment, but
Ms. Lagarde told Agence France-Presse that she had no intention of
stepping down from her post at the monetary fund.
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