France’s highest appeals court dismissed Lagarde’s challenge against the decision to try her for negligence in her handling of a dispute.
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A lawyer for Lagarde, who was French finance minister at the time of the payout in 2008, expressed regret over the court ruling but said the trial would establish she had done nothing wrong.
After learning of the decision by France’s highest appeals court, Ms Lagarde’s lawyer, Patrick Maisonneuve, said he was convinced that the trial would show she was innocent. An appeals court ruled previous year that Tapie should repay the amount.
Critics have long argued that the deal was too generous to Tapie and have speculated that he only got it because of his political connections, including to then President Nicolas Sarkozy.
“I don’t think anybody really feels that this is a matter that undermines her effectiveness”, and if Lagarde received a suspended jail sentence, “she would just carry on”, said Edwin Truman, a former U.S. Treasury official who’s now a senior fellow at the Peterson Institute for International Economics in Washington.
The case goes back to when Tapie had sued the state for compensation after selling his stake in sports company Adidas to Crédit Lyonnais in 1993. Lagarde was France’s finance minister when the payment was ordered.
If she is found guilty, Lagarde could face up to one year in prison and a fine of up to 15,000 euros.
The Cour de Cassation backed a December decision that Lagarde, 60, should stand trial for alleged negligence that paved the way for a massive government payout to tycoon Bernard Tapie.
The IMF is standing by its director: in a statement, it said it retains faith in her ability to perform her duties. In 2008 the arbitrators awarded Mr Tapie a huge payout of €405m ($444m); Ms Lagarde was accused of failing to safeguard taxpayers’ money.
He added in an e-mailed statement that it “would not be appropriate” for the International Monetary Fund to comment on the case.
Her predecessor, compatriot Dominique Strauss-Kahn, was acquitted of pimping by a French court last year, four years after he resigned from his International Monetary Fund post to fight sexual assault allegations.
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Lagarde has not been accused of profiting personally from the Tapie case, which has been moving through the French court system for years.
