Paris, March 10: An inquiry into whether former government officials were complicit in the payment of huge damages to a tycoon could lead to a second French head of the International Monetary Fund being forced to step down.
Speculation is growing that Christine Lagarde, the former French finance minister who succeeded Dominique Strauss-Kahn at the helm of the IMF, may be placed under formal probe after being summoned to answer questions by a judge in the next few days.
She is facing accusations of “complicity in embezzlement” of public funds for instigating an arbitration process that awarded £348m to Bernard Tapie, a controversial businessman who claimed to have been defrauded by a state-owned bank in the 1990s.
Lagarde, 57, has denied any wrongdoing, as has Stephane Richard, the chief executive of France Telecom, her former chief of staff, whose home was raided by police last month.
Police have also searched the home of Claude Gueant, who was Nicolas Sarkozy's presidential chief of staff. Records seized from the Elysee Palace show that Tapie visited the President 18 times between 2007 and 2010. Investigators suspect that he was given a sweetheart deal in return for his support of “Sarko” in the 2007 presidential election.
Investigators are trying to determine whether Lagarde’s decision to refer the long-festering dispute between Tapie and the Credit Lyonnais bank to arbitration in 2008, rather than let it wend its way through the courts, was an abuse of power designed to help Tapie reap bigger damages from the French treasury.
Her term as IMF chief expires in 2016 but she may be forced to step down before then if placed under formal investigation, the fate suffered by Strauss-Kahn after being accused of attempting to rape a hotel maid in New York.
Lagarde’s lawyer called it “absurd” to imagine her diverting public funds for the profit of the businessman and Lagarde said recently: “Do I look like a friend of Bernard Tapie?” The businessman is best known outside France for his conviction in the 1990s Olympique Marseille football bribery scandal, for which he served six months in prison.