Christine Lagarde, the head of the International Monetary Fund, has failed in her attempt to avoid trial for alleged negligence over a long-disputed multimillion-euro government payout to a French tycoon.

After eight years of legal wrangling, court rulings made then overturned, accusations and denials, France’s cour de cassation threw out Lagarde’s appeal to have the case dropped. Friday’s decision came just a fortnight after the French former finance minister began her second term running the Washington-based IMF.

In December last year, Lagarde, 60, was ordered to appear in court over the decision in 2008 to award more than €400m (then £290m) to Bernard Tapie in his case against the French public bank Crédit Lyonnais. He supported the former rightwing president Nicolas Sarkozy in whose government Lagarde served.

After a long investigation, judges decided she should face accusations of “negligence by a person in a position of public authority”.

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Lagarde’s lawyer, Patrick Maisonneuve, expressed disappointment at the decision, but told the Associated Press he expected the trial to show she did nothing wrong.

The complex and drawn-out case centres on whether Tapie was offered a deal in return for supporting Sarkozy in the 2007 presidential election, and whether Lagarde was acting on the orders of the Elysée Palace – specifically Sarkozy – by referring the case to private arbitration rather than allowing it to take its course through the normal courts.

Tapie, 73, who formerly owned Adidas as well as the French football team Olympique de Marseille and was briefly a pop star and racing car driver before turning his hand to business, accused Crédit Lyonnais of undervaluing his stake in Adidas.



He had been instructed to sell the then ailing sports company to avoid a conflict of interest after he was offered a post in François Mitterrand’s Socialist government in 1993. After agreeing a price of €315.5m from a private investment group, Adidas was sold a year later for €701m to a businessman who was part of the group.

December’s decision by the cour de justice de la république, which oversees criminal proceedings against government officials, said Lagarde had ignored ministerial advice on the case. Afterwards, Lagarde said sending her to trial was “difficult to comprehend” and announced her appeal.

The Tapie case pre-dates Lagarde’s time in government, having dragged on for two decades. It crawled its way through various courts until it was eventually referred by Lagarde to a three-person arbitration panel, which in 2008 awarded Tapie €403m in damages and interest. As Crédit Lyonnais had been wound up and its liabilities taken over by a state-operated consortium, the money was paid out of public funds and the out-of-court settlement caused a national outcry.

There was a further twist last December when a French appeal court overruled the compensation award. It ordered Tapie to repay the sum with interest, prompting him to declare he had spent all the money and say: “I am ruined. Ruined.”

French judges have accepted Lagarde had no personal relationship with the protagonists in the case, that she had no say in the choice of arbiters and that the arbitration case was already being prepared when she entered Sarkozy’s government in 2007. However, in December they declared that her approval of the decision not to allow the case to be judged in the ordinary courts, but by a panel of private arbiters, was against “opposite and repeated advice” of ministry officials.

Lagarde has repeatedly argued that she “always acted in the interest of the state and with respect for the law”.

A charge of negligence in the use of public money carries a one-year jail sentence and a €15,000 fine. The CJR is made up of six members of the French Assemblée Nationale, six members of the upper house, the Senate and three magistrates. No date has been set for the hearing.