French prosecutors Wednesday placed Christine Lagarde, the chief of the International Monetary Fund, under official investigation for negligence in a French corruption investigation that stems from her time as France’s finance minister.
She said the decision in “without basis” and she planned to return immediately to her work at the IMF in Washington.
She was named after a fourth round of questioning by magistrates.
In France, an official investigation is equivalent to preliminary charges, meaning there is reason to suspect an offense, the Los Angeles Times said.
“Investigating judges can later drop a case or issue formal charges and send it to trial,” the paper said.
In June 2013, her former aide, Stephane Richard, was placed under formal investigation for fraud allegedly committed during Lagarde’s time as finance minister.
Richard was Lagarde’s chief of staff in 2008 when she sanctioned a state payout of $530 million to disgraced tycoon Bernard Tapie.
Tapie, the former president of France’s Olympique Marseille football club, spent time in prison for match fixing.
After he sold Adidas, he said French bank Credit Lyonnais had cheated him by intentionally undervaluing the company. He asked for compensation from the French government, which holds a stake in Credit Lyonnais.
Lagarde referred his case to a three-person arbitral panel that ordered the $530 million payout.
Her role in the process that led to the payout to Tapie is the focus of the French criminal investigation.
“Critics have said the deal was too generous, and was symptomatic of the cozy relationship between money and power in France,” the LA Times said.
Lagarde has been managing director of the IMF since July 2011.
She has maintained her innocence and said she acted in the best interests of France.
“After three years of proceedings, dozens of hours of questioning, the court found from the evidence that I committed no offense, and the only allegation is that I was not sufficiently vigilant,” she said Wednesday in a statement.
Richard L. Cassin is the publisher and editor of the FCPA Blog. He can be contacted here.