Lagarde Case Is ‘Weak,’ French Prosecutor Says, Raising Chances of Acquittal

http://www.nytimes.com/2016/12/15/business/international/france-lagarde-imf-trial.html

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PARIS — The prosecutor in the trial against Christine Lagarde, the head of the International Monetary Fund, raised the chance that she would be acquitted of criminal charges linked to the misuse of public funds, after he called the case “very weak” on Thursday.

Ms. Lagarde stands accused of “negligence by a person in a position of public authority,” in a matter related to her time as French finance minister. The case stems from an arbitration hearing ordered by Ms. Lagarde that ultimately awarded a French tycoon more than 400 million euros, or $425 million.

She has long dismissed the allegations — which have dogged her for nearly a decade — as politically motivated and without basis. But they have nevertheless captured the attention of the public, illustrating close ties between France’s powerful politicians and the country’s business elite.

Wrapping up a four-day trial, Jean-Claude Marin, the public prosecutor, said the testimony presented did not appear to be sufficient to merit a conviction. It is a theme prosecutors have echoed previously.

The case was halted in September 2015, when France’s top prosecutor said there was insufficient evidence. But a special court, which had been set up in 1993 to hear cases against the country’s politicians, overrode that recommendation.

Ms. Lagarde, a former senior lawyer and executive with the international law firm Baker & McKenzie, has taken time to defend herself in person, while remaining at the helm of the I.M.F. The Washington-based I.M.F. has said that while the case was a private matter, it retained confidence in her.

The case against Ms. Lagarde centers on Bernard Tapie, a former entertainer-turned-Adidas executive who has previously been jailed on corruption charges. Mr. Tapie had accused Crédit Lyonnais of cheating him out of money when he sold his stake in the sportswear company in 1993. At the time, the bank was still partially owned by the French state.

Years of legal battles ensued, with Ms. Lagarde eventually sending the dispute to a private arbitration authority in 2007. The three-person panel awarded Mr. Tapie damages and interest to be paid by the government, a ruling that angered the French public.

Ms. Lagarde’s aides suggested she annul the decision. But she declined to do so because it could result in a slew of new lawsuits from Mr. Tapie and further costs to the state.

After the ruling, questions emerged about the impartiality of one of the arbiters. That arbiter, Pierre Estoup, was accused of having ties to Mr. Tapie’s lawyer. The lawyer and Mr. Estoup are now expected to stand trial in France over whether they colluded during the arbitration proceedings.

The payout itself has since been annulled, with Mr. Tapie ordered to repay €404 million with interest to the state. He is, however, currently under bankruptcy protection and has not yet repaid the sum.