Wednesday

31st Aug 2016

French police raid IMF chief's flat

  • Lagarde became IMF chief in 2011 after the Strauss-Kahn scandal (Photo: European Council)

In what could prove a distraction from her role in helping to save the euro, French police on Wednesday (20 March) raided the Paris flat of International Monetary Fund (IMF) chief Christine Lagarde.

She denies any wrongdoing in a two-decade-old affair that revolves around disgraced business tycoon Bernard Tapie.

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But Jean-Louis Nadal, the public prosecutor, in 2011 recommended a full inquiry into allegations of "abuse of authority" while she served as French finance minister before her IMF job.

The Tapie case concerns a financial dispute between the businessman and the publicly-owned French bank, Credit Lyonnais.

Tapie in 1990 bought the ailing Adidas sportswear company with a Credit-Lyonnais-linked loan.

He was forced to sell it when he took a government job.

He later sued Credit Lyonnais for allegedly mishandling the sale.

He lost. But Lagarde in 2007 stepped in to solve the dispute via private arbitration, which ended up with Tapie in 2008 getting €400 million of French taxpayers' money.

Her critics say she should have stayed out of the case because it involved public funds.

She might also have been wise to stay out on reputational grounds - Tapie in 1997 went to jail for match-fixing in his football club. He was also suspected of dodgy campaign financing for French ex-president Nicolas Sarkozy.

Lagarde is the latest in a line of French finance chiefs with serious PR problems.

French budget minister Jerome Cahuzac stepped down on Tuesday after prosecutors launched an probe into allegations of tax evasion using a Swiss account.

The minister - who had campaigned against tax dodgers - denies any wrongdoing.

Lagarde's predecessor in the IMF job, Dominique Strauss-Kahn, resigned in 2011 following allegations that he tried to rape a cleaner in a New York hotel.

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