Inquiry could harm Lagarde’s IMF chances

FRENCH judges may seek more time to decide on opening an inquiry into finance minister Christine Lagarde’s role in a 2008 arbitration payout, which could leave allegations of misconduct hanging over her bid to head the International Monetary Fund (IMF).

Three judges will meet tomorrow to discuss whether the case brought against her by opposition deputies merits a formal probe.

A judicial source said they will likely seek extra time before deciding.

“It’s likely there won’t be a decision on Friday,” said the source at the Court of Justice of the Republic, a special tribunal qualified to judge ministers. “The June 10 meeting is a simple working meeting. There could be a decision, but not necessarily. The decision could come any time, it’s not even sure that it will come in June, there is no visibility on the date.”

Lagarde is the favourite to head the IMF after her compatriot Dominique Strauss-Kahn quit the post last month to defend himself against a charge of attempted rape in New York.

Having the threat of a legal inquiry hanging over her could prove a hitch to her candidacy, however.

Tomorrow is also the deadline for candidates to register for the IMF managing director job.

Lagarde has denied any misconduct in her approval of a €285 million arbitration payment to Bernard Tapie, a friend of French President Nicolas Sarkozy, to settle a long-running dispute between him and a state-owned bank.

She has said the investigation will have no bearing on her IMF bid.

Jean-Louis Nadal, the public prosecutor of France’s highest court, recommended earlier this year that the Court of Justice open an inquiry into Lagarde’s role in the payout to Tapie.

A former left-wing government minister who switched sides to support Sarkozy’s 2007 presidential campaign, Tapie was paid to settle his dispute with former state-owned bank Credit Lyonnais, which he had accused of defrauding him during the 1993 sale of his stake in sports giant Adidas.

Lagarde agreed to drop the judicial proceedings and submit the case to a private arbitration panel, overruling some in her ministry who argued that it should remain in court.

Her accusers say that she ignored recommendations to check whether the arbitration was legal and to appeal against the size of the award.

Reuters