Christine Lagarde, the head of the International Monetary Fund (IMF), will stand trial for her role in a 400 million euros payout in 2008 to businessman Bernard Tapie, while she was France’s finance minister, Franch highest appeals court ruled on Friday.
The court rejected her appeal against a judge's order in December for her to stand trial at the Cour de Justice de la Republique, a special court that tries ministers for crimes in office.
Lagarde was placed under formal investigation in 2014 for negligence in a protracted legal drama pitting Tapie against a bank that he accused of defrauding him during his sale of sports clothing corporation Adidas in the 1990s.
Lagarde has denied wrongdoing and that she acted on the orders of the president at the time, Nicolas Sarkozy. If convicted, she will face a year in jail, as well as a fine of €15,000.
In 2008, while being a finance minister under Sarkozy, she decided to allow arbitration in the dispute between Tapie and partly state-owned Credit Lyonnais. After arbitration decission Tapie was awarded the payout, which was made by a state-run body in charge of settling the bank’s debts.
The negligence charge comes over Lagarde’s allowing the private arbitration and her failure to challenge the award, which was hugely beneficial to Tapie but prejudicial to the state.
Tapie was ordered to repay the award to the government in February 2015.
In February the IMF board appointed Lagarde for a second term as managing director, which officially starts next week, despite all the accusations.