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13 Sep, 2016 09:37

IMF chief Lagarde to face trial after French court rejects her appeal regarding $440mn payout

France’s highest appeals court has rejected an appeal from International Monetary Fund head Christine Lagarde, meaning she will stand trial for her role in a €400 million ($440 million) payout case while she was French finance minister back in 2008.

The ruling means that Lagarde will stand trial at the Cour de Justice de la Republique in Paris, which is a special court that tries ministers for crimes committed while in office. 

“She will attend,” Lagarde's lawyer Patrick Maisonneuve told Reuters. 

Lagarde faces up to a year in prison and a fine of €15,000 ($16,850) if found guilty. A panel of three judges and 12 MPs selected from the upper and lower houses of parliament will look into her case. 

Trials at the Cour de Justice are extremely rare, with Lagarde’s hearing set to be just the fifth in the tribunal’s history. The trial is expected to run until December 20. 

In July, the Cour de Cassation, one of France’s courts of last resort, accused Lagarde of “negligence” which “resulted in a misuse of public funds by a third party.” 

The party in question was French businessman Bernard Tapie who received a €400 million payout in compensation following a lawsuit against French bank Credit Lyonnais, which he accused of undervaluing his stake in multinational sportswear company Adidas. 

In search of funds in 1993, Tapie began to look for buyers of his stake in the German sportswear company, which he eventually sold to Credit Lyonnais for two billion francs. 

A few months later, the bank – which then belonged to the state – resold the assets to businessman Robert Louis-Dreyfus for double the price. Tapie accused Credit Lyonnais of fraud and demanded compensation for lost profits, which was eventually paid out in 2007. 

In 2007, Lagarde intervened in the proceedings and appointed a special committee to resolve the issue. A year later, the committee eventually ruled in favor of Tapie and decided to pay him about €400 million. 

In 2013, Tapie was placed under formal investigation for organized fraud. The scandal threatened to expose the allegedly corrupt system at the highest level in the country during Sarkozy’s presidency. 

That same year, French authorities searched Lagarde’s home in connection with the probe. She has been under investigation since 2011, but has denied any wrongdoing.