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| Christine Lagarde on Trial in France, Overshadowing I.M.F. Role | Christine Lagarde on Trial in France, Overshadowing I.M.F. Role |
| (about 2 hours later) | |
| PARIS — Christine Lagarde, the managing director of the International Monetary Fund, went on trial in Paris on Monday, facing criminal charges that when she was France’s finance minister, her negligence resulted in the misuse of hundreds of millions of euros in public money. | PARIS — Christine Lagarde, the managing director of the International Monetary Fund, went on trial in Paris on Monday, facing criminal charges that when she was France’s finance minister, her negligence resulted in the misuse of hundreds of millions of euros in public money. |
| The trial caps a long-running legal drama that has overshadowed her role at the agency, captivated and irritated the French public, and exposed ties between powerful politicians and the wealthy. It has also compelled Ms. Lagarde to defend herself repeatedly since taking over at the I.M.F. in 2011, when another former French finance minister, Dominique Strauss-Kahn, resigned after being accused of sexually assaulting a maid in a New York City hotel. | The trial caps a long-running legal drama that has overshadowed her role at the agency, captivated and irritated the French public, and exposed ties between powerful politicians and the wealthy. It has also compelled Ms. Lagarde to defend herself repeatedly since taking over at the I.M.F. in 2011, when another former French finance minister, Dominique Strauss-Kahn, resigned after being accused of sexually assaulting a maid in a New York City hotel. |
| Ms. Lagarde is accused of “negligence by a person in a position of public authority” in overseeing a politically charged arbitration case in 2007. In the case, Bernard Tapie, a flamboyant French tycoon close to Nicolas Sarkozy, then France’s president, was awarded more than 400 million euros, or $430 million, to settle a dispute with the partly state-owned bank Crédit Lyonnais. | Ms. Lagarde is accused of “negligence by a person in a position of public authority” in overseeing a politically charged arbitration case in 2007. In the case, Bernard Tapie, a flamboyant French tycoon close to Nicolas Sarkozy, then France’s president, was awarded more than 400 million euros, or $430 million, to settle a dispute with the partly state-owned bank Crédit Lyonnais. |
| Her lawyer appealed for a postponement, but the court — which is hearing the case in the same courtroom where the French queen Marie-Antoinette was tried — denied the request. The trial is scheduled to run through Dec. 20 but could conclude earlier. | |
| Immediately after the request for a delay was denied, Ms. Lagarde, wearing a black dress suit and a red scarf, stood before the court and delivered a combative statement to the chief judge. She said, her voice occasionally shaking, that she was “profoundly shocked” by the vigor with which the case against her was pursued and by the “theories of an imaginary plot” by her to defraud the state. | Immediately after the request for a delay was denied, Ms. Lagarde, wearing a black dress suit and a red scarf, stood before the court and delivered a combative statement to the chief judge. She said, her voice occasionally shaking, that she was “profoundly shocked” by the vigor with which the case against her was pursued and by the “theories of an imaginary plot” by her to defraud the state. |
| “I would like to show you that I am not guilty of negligence, but that I acted in good faith and with confidence with the public interest in mind,” she said. | |
| “Was I negligent? No,” she continued. “And I will work to convince you allegation by allegation.” | |
| Ms. Lagarde added that she was dismayed by the charges raised by the judge, “who doesn’t even know me,” prompting the judge to cut her off abruptly and to demand that she stop criticizing the court. | Ms. Lagarde added that she was dismayed by the charges raised by the judge, “who doesn’t even know me,” prompting the judge to cut her off abruptly and to demand that she stop criticizing the court. |
| If found guilty, Ms. Lagarde faces a maximum fine of €15,000 and up to one year in prison. She would not have to resign immediately from the I.M.F., but the fund’s board would meet to decide what to do next. | If found guilty, Ms. Lagarde faces a maximum fine of €15,000 and up to one year in prison. She would not have to resign immediately from the I.M.F., but the fund’s board would meet to decide what to do next. |
| The I.M.F. board, which considers the case a private matter, was confident in Ms. Lagarde, the spokesman Gerry Rice said. | The I.M.F. board, which considers the case a private matter, was confident in Ms. Lagarde, the spokesman Gerry Rice said. |
| Ms. Lagarde, a former senior executive and lawyer with Baker & McKenzie, has contended that the investigation was without merit and may be politically motivated. She chose to present herself before the 12-person court to answer questions, rather than have only her lawyers represent her while she stayed in Washington. | Ms. Lagarde, a former senior executive and lawyer with Baker & McKenzie, has contended that the investigation was without merit and may be politically motivated. She chose to present herself before the 12-person court to answer questions, rather than have only her lawyers represent her while she stayed in Washington. |
| “She wants to respond directly to accusations that are completely unfounded,” Patrick Maisonneuve, Ms. Lagarde’s lawyer, said in an interview. | “She wants to respond directly to accusations that are completely unfounded,” Patrick Maisonneuve, Ms. Lagarde’s lawyer, said in an interview. |
| She is taking personal time away from the I.M.F. in Washington to attend the proceedings but will continue to carry out her functions as the fund’s chief while in Paris dealing with the trial, holding conference calls with staff in the evenings and remaining largely in control. | She is taking personal time away from the I.M.F. in Washington to attend the proceedings but will continue to carry out her functions as the fund’s chief while in Paris dealing with the trial, holding conference calls with staff in the evenings and remaining largely in control. |
| France’s top prosecutor halted the investigation into Ms. Lagarde in September 2015, citing insufficient evidence against her. But the chief magistrate of the court, the Cour de Justice de la République, which is made up of 12 French Parliament members and three Supreme Court justices, ignored a recommendation that the case be dropped and demanded that Ms. Lagarde stand trial anyway. | |
| As Mr. Sarkozy’s finance minister, she ordered an arbitration panel to examine claims made by Mr. Tapie, a former head of the Adidas sports empire and a Socialist who switched his political allegiance to support Mr. Sarkozy’s 2007 presidential campaign. Mr. Tapie, an entertainer-turned-businessman who has served prison time on corruption charges, had long accused Crédit Lyonnais of cheating him when it oversaw a sale of his stake in Adidas in 1993. | As Mr. Sarkozy’s finance minister, she ordered an arbitration panel to examine claims made by Mr. Tapie, a former head of the Adidas sports empire and a Socialist who switched his political allegiance to support Mr. Sarkozy’s 2007 presidential campaign. Mr. Tapie, an entertainer-turned-businessman who has served prison time on corruption charges, had long accused Crédit Lyonnais of cheating him when it oversaw a sale of his stake in Adidas in 1993. |
| In 1998, the Socialist-led French government fully privatized Crédit Lyonnais and extended it a $21 billion bailout after a string of scandals and financial difficulties. Mr. Strauss-Kahn, then finance minister, oversaw the bailout and ordered that the ministry deal with Mr. Tapie’s claim because the bank was now in state hands. | In 1998, the Socialist-led French government fully privatized Crédit Lyonnais and extended it a $21 billion bailout after a string of scandals and financial difficulties. Mr. Strauss-Kahn, then finance minister, oversaw the bailout and ordered that the ministry deal with Mr. Tapie’s claim because the bank was now in state hands. |
| But it was Mr. Sarkozy who suggested that the ministry move Mr. Tapie’s case to arbitration to speed a resolution after years of legal battles costing French taxpayers tens of millions of euros. Ms. Lagarde in 2007 sent the dispute to a private three-person arbitration authority that awarded Mr. Tapie damages and interest, to be paid with taxpayer money. | But it was Mr. Sarkozy who suggested that the ministry move Mr. Tapie’s case to arbitration to speed a resolution after years of legal battles costing French taxpayers tens of millions of euros. Ms. Lagarde in 2007 sent the dispute to a private three-person arbitration authority that awarded Mr. Tapie damages and interest, to be paid with taxpayer money. |
| The nearly half-billion-euro award stunned and angered the French public. Ms. Lagarde’s advisers suggested that she annul the decision, which she declined to do because, her lawyer said, it would have resulted in costly new lawsuits by Mr. Tapie. | The nearly half-billion-euro award stunned and angered the French public. Ms. Lagarde’s advisers suggested that she annul the decision, which she declined to do because, her lawyer said, it would have resulted in costly new lawsuits by Mr. Tapie. |
| A few months later, questions emerged about the impartiality of one of the arbitrators, Pierre Estoup, a former senior French judge who was said to have ties to Mr. Tapie’s lawyer, Maurice Lantourne. Mr. Estoup did not disclose any such ties when Mr. Lantourne and the state body representing Crédit Lyonnais recommended Mr. Estoup’s appointment to the arbitration panel. | A few months later, questions emerged about the impartiality of one of the arbitrators, Pierre Estoup, a former senior French judge who was said to have ties to Mr. Tapie’s lawyer, Maurice Lantourne. Mr. Estoup did not disclose any such ties when Mr. Lantourne and the state body representing Crédit Lyonnais recommended Mr. Estoup’s appointment to the arbitration panel. |
| Mr. Estoup was later indicted on charges of organized fraud, which he is contesting. Mr. Estoup and Mr. Lantourne are expected to stand trial in France later to determine if they colluded to facilitate the judgment for a large payout to Mr. Tapie. | Mr. Estoup was later indicted on charges of organized fraud, which he is contesting. Mr. Estoup and Mr. Lantourne are expected to stand trial in France later to determine if they colluded to facilitate the judgment for a large payout to Mr. Tapie. |
| So shaky was the outcome that a French judge in 2015 invalidated the arbitration decision, saying it was marred by fraud. The judge ordered Mr. Tapie to repay €404 million with interest to the state, leading Mr. Tapie to declare: “I’m ruined! Ruined!” However, Mr. Tapie is under bankruptcy protection and has not repaid the funds. | So shaky was the outcome that a French judge in 2015 invalidated the arbitration decision, saying it was marred by fraud. The judge ordered Mr. Tapie to repay €404 million with interest to the state, leading Mr. Tapie to declare: “I’m ruined! Ruined!” However, Mr. Tapie is under bankruptcy protection and has not repaid the funds. |
| Ms. Lagarde’s lawyers argued that until a court determined whether the funds were fraudulently awarded, there was no reason for her to stand trial for negligence leading to the abuse of public money. The court was expected to question Ms. Lagarde on why she agreed to proceed with arbitration and then declined to annul Mr. Tapie’s award, and whether she was aware of the possible partiality of the arbitration judge. | |
| The court has heard only four cases against French ministers since it was created in 1993. | The court has heard only four cases against French ministers since it was created in 1993. |