International Monetary Fund (IMF) chief Christine Lagarde will face trial in France on Monday over a huge state payout case to a business tycoon during her tenure as the French finance minister.
An Agence France-Presse (AFP) report said Lagarde allegedly mishandled a dispute with Bernard Tapie, the former owner of sportswear giant Adidas, during her term as finance minister, which resulted in payment of massive $427 million compensation to the business tycoon by the state. He has since been asked to repay the amount after a lengthy court battle.
The IMF chief, however, denied the charges of negligence arguing that she had acted "in the state's interest." If found guilty, Lagarde could receive a one-year prison sentence along with $15,900 fine, the report said. She will be tried by the Court of Justice of the Republic, a tribunal that hears cases against ministers.
Meanwhile, the case threatens the credibility of IMF, whose last three managing directors have faced trials. It also poses risk to the image of 60-year-old Lagarde, who has a stellar career progression from a former corporate lawyer to the finance minster of France to head the world's most powerful funding agency -- IMF.
According to the report, Tapie, who owned Adidas between 1990-1993, had accused a state bank of defrauding him in his sale of the sportswear firm and was fighting a legal battle against the state. On becoming finance minister in 2007 under Nicolas Sarkozy, Lagarde had ordered that Tapie's long-running battle with the state be resolved by arbitration.
Investigators suspected that the arbitration process was rigged in favour of Tapie, who had supported Sarkozy in his 2007 presidential election campaign. Although Lagarde was not accused of being personally benefited from the decision, she had been criticised for failing to challenge the huge payout award in favour of Tapie.