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POLITICS

IMF’s Lagarde in Paris for high stakes court grilling

French prosecutors investigating corruption are set to decide on Thursday whether to charge IMF chief Christine Lagarde over her handling of a row that resulted in a €400 million payout being paid to disgraced businessman Bernard Tapie.

IMF's Lagarde in Paris for high stakes court grilling
IMF chief Lagarde face Frecnh court this week. Photo: AFP

International Monetary Fund chief Christine Lagarde arrived at a Paris court Thursday for questioning over a state payout to a disgraced tycoon Bernard Tapie during her time as French finance minister.

Lagarde is appearing before the Court of Justice of the Republic (CJR), which probes cases of ministerial misconduct, to explain her 2007 handling of a row that resulted in 400 million euros being paid to Bernard Tapie.

Criminal charges against Lagarde, 57, would mark the second straight scandal for an IMF chief, after her predecessor Dominique Strauss-Kahn, also from France, resigned in disgrace over an alleged assault on a New York hotel maid.

Her court appearance comes a day after Lagarde, the first woman to run an organisation considered the pillar of the international financial system, was named as the world's seventh most powerful woman by Forbes magazine.

Known for both intellectual prowess and elegance, Lagarde smiled as she arrived at the courthouse at an upscale Paris neighbourhood, greeting the several dozen reporters outside with "It's a pleasure to see you again" before
entering the building.

Tapie is a former politician and controversial business figure who went to prison for match-fixing during his time as president of France's biggest football club, Olympique Marseille.

Prosecutors working for the CJR suspect he received favourable treatment in return for supporting Nicolas Sarkozy in the 2007 and 2012 presidential elections.

They have suggested Lagarde — who at the time was finance minister — was partly responsible for "numerous anomalies and irregularities" which could lead to charges for complicity in fraud and misappropriation of public funds.

Lagarde would not automatically be forced to resign her job as head of the International Monetary Fund if a French court decides to prosecute her in the Bernard Tapie case.

But such a ruling could weaken her as managing director of the Fund, after having led it through four difficult eurozone rescues in her 22 months in the job.

And it would mean the second IMF managing director in a row – both French – beset by legal problems, after the sex scandal that forced the resignation of her predecessor, Dominique Strauss-Kahn.

The investigation centres on her 2007 decision to ask a panel of judges to arbitrate in a dispute between Tapie and Credit Lyonnais, the collapsed, partly state-owned bank, over his 1993 sale of sports group Adidas.

Tapie had accused Credit Lyonnais of defrauding him by consciously undervaluing Adidas at the time of the sale and argued that the state, as the former principal shareholder in the bank, should compensate him.

His arguments were upheld by the arbitration panel but critics claimed the state should not have taken the risk of being forced to pay compensation to a convicted criminal who, as he was bankrupt at the time, would not have been able to pursue the case through the courts.

The payment Tapie received enabled him to clear his huge debts and tax liabilities and, according to media reports, left him with 20-40 million euros which he has used to relaunch his business career.

"Lagarde will for the first time have the opportunity to provide (the CJR) with explanations and clarifications that exempt her from any criminal responsibility," Yves Repiquet, Lagarde's lawyer, said of the court appearance.

The IMF has stood by Lagarde, who replaced her compatriot Dominique Strauss-Kahn as head of the organisation in 2011.

"There's nothing new under the sun," she said last month in Washington.

"Ever since 2011 I had known very well that I will be heard by the investigative commission of the Cour de Justice."

She has said the arbitration was necessary to put an end to a long-winded and costly dispute, and has always denied having acted under direct orders from Sarkozy.

A charismatic populist, Tapie was a minister under Socialist president Francois Mitterrand but he backed right-winger Sarkozy in the 2007 and 2012
elections.

He recently purchased a newspaper group in the south of France and there has been speculation about him re-entering politics as a candidate for mayor of Marseille in 2014.

Lagarde, meanwhile, has had a glittering career in law and politics.

She is the first woman to head the IMF and was also France's first female finance minister from 2007 to 2011 after rising to the executive board of US legal giant Baker & McKenzie.

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FRENCH POLITICS

Pro-Macron MP becomes France’s first woman speaker

France's lower house of parliament has agreed to pick an MP from President Emmanuel Macron's centrist coalition as the first woman speaker, despite the ruling alliance losing its majority in legislative elections.

Pro-Macron MP becomes France's first woman speaker

Yael Braun-Pivet, who had been serving as the minister for overseas territories, is the first woman to ever hold the post of speaker in the history of the Assemblée nationale.

Despite the loss of its overall majority, Macron’s ruling alliance still managed to push through her appointment in the second round of voting.

Prime Minister Elisabeth Borne and other senior Macron backers have been trying to win over individual right-wing and moderate left parliamentarians to bolster their ranks.

Borne, appointed last month, is France’s second woman prime minister after the brief stint by Edith Cresson in the 1990s.

Olivier Marleix, head of the centre-right Les Républicains group seen as most compatible with Macron, met Borne on Tuesday. “We’ve told her again there is no question of any kind of coalition,” he said.

But he added that the prime minister “really showed that she wanted to listen to us. That’s quite a good sign.

“We’re here to try and find solutions,” he added. “There will be some draft laws where I think we should be able to work together,” including one to boost households’ purchasing power in the face of food and energy inflation.

“It’s not in the interest of parties who have just been elected” to make a long-term deal to support the government, said Marc Lazar, a professor at Paris’s Institute of Political Studies (Sciences Po).

Borne under pressure

One key question will be whether Thursday’s vote to head the finance committee – with its extensive powers to scrutinise government spending – will be won by an MP from the far-right Rassemblement National (RN).

Led by Macron’s defeated presidential opponent Marine Le Pen, the RN would usually have a claim on the post as the largest single opposition party.

It faces a stiff challenge from the NUPES left alliance – encompassing Greens, Communists, Socialists and the hard-left France Unbowed (LFI) – who agreed on Tuesday on a joint candidate after some internal jostling.

Next week could see exchanges heat up in the chamber, as government chief Borne delivers a speech setting out her policy priorities.

Macron told AFP at the weekend that he had “decided to confirm (his) confidence in Elisabeth Borne” and asked her to continue talks to find either allies for the government in parliament or at least backing for crucial confidence and budget votes.

The president has ruled out both tax increases and higher public borrowing in any compromise deals with other parties.

Even as the government projects business almost as usual, hard-left LFI especially has vowed to try to prevent key proposals, such as the flagship reform to raise the legal retirement age from 62 to 65.

Party deputy chief Adrien Quatennens said on Sunday there was “no possible agreement” with Macron, saying cooperation would “make no sense”.

“We haven’t heard (Macron) move or back down one iota on pension reform” or other controversial policies, he added.

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