Christine Lagarde to stand trial for negligence in France

If convicted, IMF chief faces up to a year in prison and a $16,000 fine

In a strange turn of affairs, IMF chief Christine Lagarde will be taking time off her day job solving the world’s financial crises in order to solve a legal crisis of her own on Monday – a trial — in which she has been accused of negligence after the French state handed over $425 million to Bernard Tapie, a tycoon friend of the French president’s in 2008.

In a trial that is scheduled to go on until December 20, Lagarde, if convicted of negligence, faces up to a year in prison and a 15,000 euro fine.

While sixty year-old Christine Lagarde denies any wrong-doing in the case, which dates back to the time she was economy and finance minister, her upcoming trial and possible conviction is beginning to raise concern about her ability to stay at the helm of the IMF, especially after the institution’s credibility was badly shaken when her predecessor, Dominique Strauss-Kahn, also a French citizen, was forced to resign after sexual assault allegations as recently as 2011.

Lagarde is being tried for her role in a 2008 arbitration ruling that handed over 403 million euros to Barnard Tapie, an ally of the man who had been president of France at the time, Nicolas Sarkozy.

Tapie had sued Credit Lyonnais over its handling of the sale of his majority stake in the sportswear company Adidas in the mid-1990s.

When Lagarde assumed the role of finance minister in 2007, she put an end to the lengthy legal battle by ordering it settled through an unusual arbitration panel instead of the conventional or regular courts.

Christopher Mesnooh, a legal analyst and lawyer with the Paris, New York and Washington bars, described the Tapie case as “highly political,” and said that the French people feel strongly about it because “there is a question of money involved. Lagarde had a high government position when the decision was made to pursue the arbitration and then not to appeal the award,” he told the Associated Press.

Source: CNBC