IMF Chief Christine Lagarde Being Investigated for Fraud

International Monetary Fund Chief Christine Lagarde is under investigation by French authorities for alleged negligence and political fraud surrounding her role in awarding a sum of 400m euro (£318m; $527m) to French business tycoon Bernard Tapie in 2008, while serving as finance minister in former President Nicolas Sarkozy’s cabinet.

Lagarde reportedly denies any wrongdoing, according to the BBC. Tapie reportedly supported Sarkozy in his 2007 presidential election bid, which came as a shock for many considering he had been a career socialist until the sudden move. The investigation questions whether the reward paid out to Tapie under Lagarde’s watch was an abuse of power and whether the awards were paid out as a result of Tapie’s support of Sarkozy.

Tapie, who was once a majority shareholder in sportswear and goods company Adidas, sued Credit Lyonnais alleging the partially state-owned bank had deliberately undervalued the company in order to provide him with a smaller payout as part of his departure from the company, notes the BBC. Tapie had sold his share in Adidas in order to pursue a position as cabinet minister in Francois Mitterrand’s Socialist government.

Lagarde, who replaced Dominique Strauss-Kahn in 2011 after he resigned following a sex scandal in New York involving a hotel maid, was reportedly detained for 15 hours of questioning. (The charges against Strauss-Kahn were later dropped.) 

Being placed under formal investigation does not necessarily translate to charges for Lagarde as of yet, notes the BBC. However, developments in the case could raise questions as to the remainder of her term at the IMF which is set to expire in 2016. Lagarde reportedly told the AFP that she has no intentions to resign.

In June, Sarkozy was similarly detained for 15 hours of questioning under suspicion of corruption. Sarkozy’s detention marked the first time a former French head of state has been held in police custody. On July 2, Sarkozy was formally charged with corruption and influence peddling in a criminal investigation.

Tapie has suggested that the investigation on Lagarde is a politically-motivated move by the socialists in order to block a possible 2017 presidential run by Sarkozy.