IMF chief Christine Lagarde questioned by French judge

PARIS -- Christine Lagarde, the head of the International Monetary Fund, was questioned by a judge Thursday over her role in a $366-million payout to a businessman supporter of former French President Nicolas Sarkozy.

Lagarde appeared in a Paris court to answer questions over her decision in 2007, when she was France’s finance minister, to refer a long-running legal dispute between the state and businessman Bernard Tapie to arbitration, which led to the massive out-of-court settlement.

The judge will decide whether to put Lagarde under formal investigation, depending on whether the court finds “serious or consistent evidence” that she was implicated in a crime.

The case has haunted Lagarde, 57, since her appointment in 2011 as the first female head of the IMF, where she replaced compatriot Dominique Strauss-Kahn after he was forced to resign over an alleged sexual assault in the United States.

Recently voted the most influential woman in France by Slate magazine, Lagarde is not suspected of profiting personally from the payout and has denied any wrongdoing. She has been accused of complicity in the misuse of public funds because she overruled advisors in seeking to settle the dispute with Tapie using private arbitration.

Tapie, 70, a flamboyant former Socialist government minister who later changed sides to support the conservative Sarkozy, had accused the French bank Credit Lyonnais of defrauding him after it bought sports firm Adidas from him and then sold it at a much higher price. The bank has also denied any wrongdoing.

Tapie served time in prison in the early 1990s for match-fixing involving the soccer club he owned, Olympique de Marseille.

Current French Finance Minister Pierre Moscovici has said he supports Lagarde, but added that the government would launch an appeal against the arbitration payout to Tapie if she was formally placed under investigation.

If this happens, Lagarde is not expected to resign from the IMF, which has said it supports her, but her influence would likely be weakened.

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