SHORTLY after taking up the post of French economy minister in 2007, Christine Lagarde agreed to let a dispute between the government and a prominent businessman, Bernard Tapie, be settled by arbitration rather than in the courts. She has regretted it ever since. In 2008 the arbitrators awarded Mr Tapie a huge payout of €405m ($444m); Ms Lagarde was accused of failing to safeguard taxpayers’ money. On July 22nd one of France’s highest courts ruled that Ms Lagarde, now the head of the International Monetary Fund, must stand trial for negligence. She denies the charges.
The scandal over the payout to Mr Tapie centred on charges of political cronyism. The businessman contended that Credit Lyonnais, a defunct state-owned bank, had given him bad advice when he sold his stake in Adidas, a sportswear company, in 1993. He thought the state owed him money. The government fought Mr Tapie in the courts until 2007, when Nicolas Sarkozy became president and appointed Ms Lagarde, who agreed to go to arbitration. Mr Tapie had supported Mr Sarkozy’s election campaign. Critics alleged the decision to settle the case was payback.
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