The International Monetary Fund has another scandal to deal with, although this time it’s a financial one. A French court has today ordered an investigation into the new IMF head, Christine Lagarde, and her role in a much-criticised $400 million arbitration deal in favour of a controversial tycoon. It concerns the mishandled sale of sportswear maker, Adidas, in the 1990’s.

At the time of the deal, Lagarde was the French finance minister and she will be investigated on the grounds of the abuse of authority.

The business magnate, Bernard Tapie, won a settlement in 2008 with a former French state-owned bank over the mishandled sale of sportswear maker Adidas in the 1990’s.

Prosecutors have claimed that Ms Lagarde abused her authority by approving the $400 million payment to Tapie, who had lost the case in the country’s highest court, but was appealing against the decision.

Tapie’s court battle with the former state-owned bank, Credit Lyonnais, ensued after he sold off a stake in the sports clothing business, but alleged he had been defrauded by the bank as a result.

It’s claimed that Ms Lagarde overruled objections from her officials and intervened in the judicial case, pushing the bank and Mr Tapie into binding arbitration, and thus the payment of the settlement.

Tapie is a former left-wing minister who defected to support Nicolas Sarkozy during the 2007 presidential election.

Lagarde has denied any misconduct and a lawyer representing her says the investigation will not hamper her role as the IMF boss – a position she has only occupied for about a month.

Thus far, no proof that she has benefitted financially or otherwise from the deal has emerged.

It is highly embarrassing for her though. No getting around that one.

[Source: BBC]