IMF chief Lagarde in court in fraud probe

PARIS – International Monetary Fund chief Christine Lagarde faced hours of questioning at a special Paris court Thursday over her role in the 400 million euro ($520 million) pay-off to a controversial businessman when she was France’s finance minister.

The court hearing threatens to sully the reputations of both Lagarde and France. The payment was made to well-connected entrepreneur Bernard Tapie as part of a private arbitration process to settle a dispute with state-owned bank Credit Lyonnais over the botched sale of Adidas in the 1990s. It is seen by many in France as an example of the cozy relationship between big money and big power in France.

The proceedings were expected to continue Friday at the special Paris court that handles cases involving government ministers. Smiling and waving to reporters after more than 12 hours at the court on Thursday, Lagarde said only, “A demain” (“see you tomorrow”) to a person behind her before climbing into a car. She has denied wrongdoing.

Lagarde has earned praise for her negotiating skills as managing director of the IMF through Europe’s debt crisis and is seen as a trailblazer for women leaders. Her decision to let the Adidas dispute go to private arbitration rather than be settled in the courts has drawn criticism, and French lawmakers asked magistrates to investigate.

At a press briefing Thursday in Washington, IMF spokesman Gerry Rice said its executive board, at Lagarde’s request, had already waived her diplomatic immunity to the extent necessary to enable her to appear before French authorities in the case.