Paris : A French court on Thursday ordered an investigation into new IMF chief Christine Lagarde's role in a much-criticized $400 million arbitration deal in favor of a controversial tycoon.
Ms Lagarde was France's finance minister when magnate Bernard Tapie won a settlement in 2008 with a French state-owned bank over the mishandled sale of sportswear maker Adidas in the 1990s.
Ms Lagarde took over as managing director of the International Monetary Fund (IMF) last month after her predecessor, Mr Dominique Strauss-Kahn, quit to face charges that he tried to rape a New York hotel maid.
A commission at France's Court of Justice of the Republic decided on Thursday that an investigation should be launched into Ms Lagarde's role in the arbitration deal. It is a special court that convenes rarely and only to handle cases involving government ministers.
A senior prosecutor had requested an investigation in May, saying he suspected Ms Lagarde had overstepped her authority in allowing the arbitration to go forward.
Gerard Palisse, the head of the commission, announced the decision to reporters.
Ms Lagarde's lawyer, Yves Repiquet, said she is not worried about the investigation and even welcomes it. "We'll get to the bottom of things. There will no longer be the least doubt," he told reporters after speaking with her by phone. The possibility of a French investigation has dogged Ms Lagarde even before she was appointed to head the IMF.
Critics have said the case shouldn't have gone to a private arbitration authority because it involved a state-owned bank, Credit Lyonnais, and that Ms Lagarde should have questioned the independence of one of the arbitration panel's judges.
It will likely take months before the investigation is completed and a decision is made on whether to send the case to the special court for a trial.
While Ms Lagarde was finance minister, she won praise for her role in international negotiations during the global financial crisis and Europe's debt troubles.
After the legal troubles her predecessor Mr Strauss-Kahn faced, Ms Lagarde's IMF contract says she is "expected to observe the highest standards of ethical conduct" and "shall strive to avoid even the appearance of impropriety in your conduct."
Mr Strauss-Kahn's contract did not include such language.
Ms Lagarde was France's finance minister when magnate Bernard Tapie won a settlement in 2008 with a French state-owned bank over the mishandled sale of sportswear maker Adidas in the 1990s.
Ms Lagarde took over as managing director of the International Monetary Fund (IMF) last month after her predecessor, Mr Dominique Strauss-Kahn, quit to face charges that he tried to rape a New York hotel maid.
A senior prosecutor had requested an investigation in May, saying he suspected Ms Lagarde had overstepped her authority in allowing the arbitration to go forward.
Advertisement
Ms Lagarde's lawyer, Yves Repiquet, said she is not worried about the investigation and even welcomes it. "We'll get to the bottom of things. There will no longer be the least doubt," he told reporters after speaking with her by phone. The possibility of a French investigation has dogged Ms Lagarde even before she was appointed to head the IMF.
Advertisement
It will likely take months before the investigation is completed and a decision is made on whether to send the case to the special court for a trial.
Advertisement
After the legal troubles her predecessor Mr Strauss-Kahn faced, Ms Lagarde's IMF contract says she is "expected to observe the highest standards of ethical conduct" and "shall strive to avoid even the appearance of impropriety in your conduct."
Advertisement
COMMENTS
Advertisement
IMF Says "8% Growth Forecast For India Not Ours", Distances From Top Exec Pakistan Needs Another IMF Loan For Stability, Says PM Shehbaz Sharif IMF Confirms That Cash-Strapped Pakistan Is Seeking 24th Bailout Parents Gave Names Of Interns, Doctors To CBI In Kolkata Horror: Sources How Extreme Weather Is Leading To Rise In Child Marriages In Pakistan Who Is Jasveen Sangha, "Ketamine Queen" Charged With Matthew Perry's Death Pilot Dies After Plane Crashes During Aerobatic Show In France "Vandals, Scandals Marring Civic Life In Bengal": Governor On Kolkata Rape Group Backed By Bloomberg, NASA To Launch 1st Methane-Hunting Satellite Track Latest News Live on NDTV.com and get news updates from India and around the world.