IMF chief Christine Lagarde goes on trial in France on Dec. 12 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 โin the stateโs interestโ in making the payment to Bernard Tapie, the former owner of sportswear giant Adidas and the Olympique Marseille football club.
If found guilty, Lagarde could receive a one-year prison sentence and a 15,000 euro ($15,900) fine.
Whatever the outcome, the case risks damaging the image of 60-year-old Lagarde, a former corporate lawyer who progressed through the finance ministry to her current role as one of the worldโs most powerful women.
The case 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 Lagarde, who was named to a second term in February this year, over the case.
She will be tried by the Court of Justice of the Republic, a tribunal that hears cases against ministers accused of wrongdoing in the discharge of their duties.
In a documentary aired on French television late on Dec. 11, Lagarde said she was โconfident and determinedโ ahead of the trial.
โI tried to do my work the best I could within the limits of what I knew,โ she told France 2.
โNegligence is an unintentional offence. I think all of us have been a little bit negligent at some stage of our lives,โ added Lagarde.
The accusations stem from Lagardeโs 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 the newly elected president Nicol as Sarkozy, ordered that Tapieโs 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 ($427 million) in compensation in 2008. After a lengthy court battle, he has since been 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.
Lagarde, who served as finance minister until 2011, has always insisted she acted in Franceโs 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 โdeprived the state of a chance to avoid this money being misused.โ
She will be judged by a panel of three judges and 12 lawmakers selected from Franceโs upper and lower houses of parliament.
