IMF Chief Lagarde Goes on Trial in France over Tycoon Case

IMF chief Christine Lagarde went on trial in France on Monday over a massive state payout to a flamboyant tycoon when she was finance minister, in a case that risks tarnishing her stellar career.

Lagarde denies the charges of negligence, arguing she was acting "in the state's interest" in approving the payment to Bernard Tapie, the former owner of sportswear giant Adidas.

If found guilty, the 60-year-old could receive a maximum one-year prison sentence and a 15,000 euro ($15,900) fine.

She arrived at the Court of Justice of the Republic, a tribunal that hears cases against ministers, wearing a dark suit and a patterned scarf. Her defense team is expected to push for an adjournment.

"I don't plan to keep quiet," Lagarde told the presiding judge, when advised of her right to remain silent.

In a documentary aired on French television on Sunday, Lagarde said she was "confident and determined."

"I tried to do my work the best I could within the limits of what I knew," she told France 2. 

"Negligence is an unintentional offense. I think all of us have been a little bit negligent at some stage of our lives," she added.

Whatever the outcome, the case risks damaging the image of the former corporate lawyer who progressed through the finance ministry to become one of the world's most powerful women. 

It also threatens the credibility of the International Monetary Fund, as Lagarde is the third IMF chief to face trial.

The IMF has given its full backing to its managing director, who began her second term in the post in July. 

Lagarde's lawyer Patrick Maisonneuve on Monday dismissed speculation about what the IMF would do if she lost the case.

"She will be cleared so the question hasn't even arisen," he told Europe 1 radio.

- Tapie's deals -

The accusations stem from Lagarde's handling of a dispute with Tapie, a former government minister who claimed a state bank had defrauded him in its sale of Adidas.

Tapie, now 73, owned the firm between 1990 and 1993 but lost control of it when he went bankrupt. 

He sold it to state-owned bank Credit Lyonnais for 315.5 million euros in February 1993. The bank sold it again the year after at 701 million euros, leading Tapie to claim he had been cheated.

Lagarde, upon becoming finance minister in 2007 under then president Nicolas Sarkozy, ordered that Tapie's long-running battle with the state be resolved by arbitration.

The decision was hugely costly, with Tapie initially walking away with a staggering 404 million euros in compensation in 2008. After a lengthy court battle, he was ordered to repay the money.

Investigators suspect the arbitration process was rigged in favor of Tapie, who had supported Sarkozy in his 2007 election campaign. One of the arbitrators also had links to the businessman.

Lagarde, who served as finance minister until 2011, has always insisted she acted in France's best interest.

Although she is not accused of personally profiting from the payment, she has been criticized for failing to challenge the award. 

The prosecution says that through her actions, Lagarde "deprived the state of a chance to avoid this money being misused."

In an interview with the Journal du Dimanche newspaper published Sunday, Tapie insisted that Lagarde "never did me any favors."

He is among six people charged in a separate fraud case related to the payout, including the head of telecoms company Orange, Stephane Richard, a former aide to Lagarde.

Lagarde herself will be judged by a panel of three judges and 12 lawmakers selected from France's upper and lower houses of parliament.

Maisonneuve, her lawyer, questioned on Monday how the court could decide "in a few days" whether there had been any wrongdoing when other judges had been looking into the case and "haven't made a decision in several years."

Lagarde succeeded her disgraced compatriot Dominique Strauss-Kahn as IMF managing director after he resigned to fight sexual assault charges.

Another former IMF head, Spaniard Rodrigo Rato, is currently standing trial for misusing funds when he was head of Spanish lender Bankia.

As well as Adidas, Tapie also owned the Olympique Marseille football club when they won the 1993 European Cup, the forerunner of the Champions League, but they were later embroiled in a match-fixing scandal.