IMF's Lagarde investigated in French fraud case

PARIS, Aug. 27 (UPI) -- International Monetary Fund Director Christine Lagarde has been placed under formal investigation for her role in a case from 2008, when she was France's finance minister.

Lagarde was placed under formal investigation for "negligence" for allowing arbitration to settle a dispute between the former state-owned bank Credit Lyonnais and businessman Bernard Tapie. A formal investigation does not automatically lead to trial.

She says she does not intend to step down from her IMF job, and will convene a meeting of the IMF board to explain the situation to her colleagues.

Tapie, a supporter of then-President Nicolas Sarkozy, sued Credit Lyonnais over its handling of the sale of the sporting goods company Adidas, in which he was the majority shareholder, in 1993.

He alleged the bank had defrauded him by deliberately undervaluing the company.

The Cour de Justice de la Republique, which specifically examines cases of ministerial misconduct, has been investigating whether Lagarde erred in allowing the arbitration, through which Tapie won a 385-million-euro ($507 million) award.

She told a panel of judges last year it was "the best solution at the time."

Lagarde's term at the IMF is due to end in 2016.