IMF chief Christine Lagarde in negligence trial in France Published duration 12 December 2016

image copyright Reuters image caption Christine Lagarde, here with her lawyer at the start of the trial, denies any wrongdoing

IMF chief Christine Lagarde has gone on trial in France for negligence over a compensation payment made by a state-owned bank to a businessman in 2008.

As finance minister of then-President Nicolas Sarkozy, she approved an award of €404m ($429m; £340m) to Bernard Tapie for the disputed sale of a firm.

Mr Tapie had supported Mr Sarkozy in the 2007 presidential election.

She is accused of allowing the misuse of public funds, rather than corruption. She denies wrongdoing.

The case originates in the early 1990s, when Mr Tapie was a majority shareholder in sports goods company Adidas.

After launching a political career and becoming a cabinet minister in Francois Mitterrand's Socialist government in 1992, Mr Tapie had to sell the company.

In 1993, he sued Credit Lyonnais, a state-owned bank that handled the sale, alleging that the bank had defrauded him by deliberately undervaluing the firm.

Facing jail

By 2007, the long-running case was referred by Ms Lagarde to binding arbitration. A three-member panel awarded the compensation a year later, causing a public outcry.

Last year, after eight more years of legal wrangling, a French court ruled that Mr Tapie had not been entitled to compensation and should repay the €404m.

image copyright AFP image caption Bernard Tapie was ordered to pay back the €404m with interest

Ms Lagarde, 60, is now facing the Court of Justice of the Republic (CJR) on charges of "negligence by a person in position of public authority".

The court, composed mostly of politicians rather than judges, handles allegations of crimes committed by cabinet ministers in office.

Ms Lagarde was sent to trial by CJR magistrates even though prosecutors had argued that the case should be dropped. The trial is due to last until 20 December.

If convicted, Ms Lagarde could face one year in prison.

She replaced Dominique Strauss-Kahn as IMF managing director in 2011.

Mr Strauss-Kahn - also a former French finance minister - resigned following his arrest in New York on charges of sexual assault that were later dropped.

Lagarde-Tapie: A French saga

1993: Credit Lyonnais bank handles sale of Adidas to enable tycoon to pursue ministerial career under then Socialist President Francois Mitterrand

1993-2007: Mr Tapie claims Credit Lyonnais undervalued Adidas and that he was cheated; lengthy court battle ensues

1994: Bernard Tapie's highly indebted group collapses and is wound up by Credit Lyonnais

2007: Mr Tapie supports conservative Nicolas Sarkozy in presidential election. Finance Minister Christine Lagarde intervenes in Tapie case to order binding arbitration

2008: Special judicial panel rules Mr Tapie should receive damages of €404m; Ms Lagarde decides not to challenge ruling

2011: Public prosecutor recommends investigation into Ms Lagarde's decision to order arbitration

2013: Ms Lagarde questioned by magistrate and her home searched. Mr Tapie under investigation.

2014: Ms Lagarde is cleared of the most serious charges of corruption, but investigated on charges of negligence