MercoPress. South Atlantic News Agency

IMF chief summoned to appear before French court over an arbitration payment

Lagarde is believed to have favoured businessman Tapié a strong supporter and fund raise of ex President Sarkozy

IMF chief Christine Lagarde has been summoned to appear before a French magistrate on May 23 for questioning over an arbitration payment to a wealthy supporter of former President Nicholas Sarkozy, news website Mediapart reported.

Lagarde, France's former Finance minister, could be placed under formal investigation, Mediapart said citing unnamed sources. Lagarde has denied she did anything wrong when she ended a court battle between the state and billionaire businessman Bernard Tapie by accepting arbitration to settle the dispute.

Magistrates from a special court that handles alleged abuses by government ministers suspect Lagarde of complicity in misusing public funds as finance minister when she overruled objections from advisers to go ahead with the arbitration.

As a result of the decision to accept arbitration, the state paid 285 million Euros of taxpayers' money to Tapie.

A formal investigation would deal a blow to the head of the International Monetary Fund, after it turned the page on the resignation of her predecessor, Dominique Strauss-Kahn, over sexual assault charges that were later dropped.

“As we have said before, it would not be appropriate to comment on a case that has been and is currently before the French judiciary,” an IMF spokesman said. “However, the executive board has been briefed on this matter, including recently, and continues to express its confidence in the managing director's ability to effectively carry out her duties.”

News of the court date comes on the eve of the twice-yearly IMF and World Bank meetings of global finance leaders, who will discuss the latest developments in the world economy.

The investigation has been open since 2011 and Lagarde has never been summoned for questioning, although authorities searched her Paris apartment last month.

Tapie, a colourful and often controversial character in the French business and sports world, sued the state for compensation after selling his stake in sports company Adidas to then state-owned bank Credit Lyonnais in 1993.

He claimed the bank had defrauded him after it later resold his stake for a much higher sum. Credit Lyonnais, now part of Credit Agricole, has denied any wrongdoing.

Tapie has been a political supporter of Sarkozy.

Mediapart has been in the spotlight in France since it reported last December that budget minister Jerome Cahuzac held a secret Swiss bank account.

Cahuzac resigned last month to fight the revelation, but later acknowledged it was correct, plunging the government into a political crisis that is stirring public debate about ethics in French politics.