IMF Chief Under Investigation: The Ghost of DSK?

Christine Lagarde, who came into power as head of the IMF, did so to replace Dominique Strauss Kahn, at the time he was charged in NYC of sexually assaulting a hotel maid. Now, Lagarde finds herself under investigation.

According to NYT,  Lagarde has issued a statement saying that French prosecutors have placed her under formal investigation over a murky business affair that dates to her time as finance minister under former President Nicolas Sarkozy.

Lagarde said in a statement through her lawyer that she was being investigated for “simple negligence,” by the Court of Justice of the Republic, the judicial body that is charged with investigating the conduct of high government officials.

In the French legal system, a formal investigation suggests prosecutors believe they have enough of a case that they may ultimately bring criminal charges and trial. The reality is that many such investigations drag on for years with no charges being filed before being dropped, reports NYT.

The investigation centers around Lagarde’s role in a 2008 arbitration proceeding between the government and Bernard Tapie, a onetime cabinet minister and the former owner of the Adidas sportswear empire.

Tapie, who had been in a long dispute with a state-owned bank, Credit Lyonnais, walked away from the arbitration with more than 400 million euros, or nearly $530 million at current exchange rates, according to NYT.

A career Socialist, Tapie in 2007 suddenly backed Sarkozy’s center-right Union for a Popular Movement party. The amount of the award came as a shock to public opinion, and the investigation began after critics accused Sarkozy’s government of having carried out a sham arbitration. The investigation just doesn't seem to die. The ghost of DSK?

-RW

(ht Graham Dugas)