PARIS: A French court on Friday ordered International Monetary Fund chief Christine Lagarde to stand trial over a massive state payout to a controversial tycoon when she was the country's economy minister.
France's highest appeal court dismissed Lagarde's appeal against the decision to try her for negligence in her handling of the affair, in which Bernard Tapie walked away with 404 million euros in taxpayers' money in 2008.
The trial would take place before a special tribunal that hears cases against government ministers accused of wrongdoing in the discharge of their duties.
Lagarde, 60, was placed under formal investigation in 2014 over her handling of a long-running dispute with Tapie, who claimed he was defrauded by the state-controlled bank Credit Lyonnais in its handling of his sale of the sporting goods giant Adidas in the 1990s.
Lagarde's involvement stems from her decision to let the row be settled by arbitration instead of the courts, which would likely have resulted in a much smaller settlement for Tapie.
The negligence charge relates to that decision and Lagarde's later failure to challenge the award, which was hugely prejudicial to the state.
A court has since found the arbitration to be fraudulent because one of the arbitrators had links to 73-year-old Tapie.
Lagarde has denied any wrongdoing or that she acted on orders from then-president Nicolas Sarkozy, of whom Tapie was a supporter. She herself is not accused of personally profiting in any way.
"I've always acted in accordance with the law, and I've always had in mind the public interest," she told AFP in an interview in Washington earlier this month. "It was not my duty to select the arbitration panel, to investigate their past and history, and I had no reason to doubt their probity and honesty."
Investigating magistrates, however, found evidence of "serious negligence on the part of a minister tasked with conducting affairs of state" and in December ordered the case go to trial. Lagarde appealed the decision.
If tried and convicted, she faces up to a year in prison and a fine of 15,000 euros.
Lagarde's legal woes have done little to dent her popularity in France, where her name has long been bandied about as a possible contender for president.
However, in an interview with AFP earlier this month, she appeared to rule out any return to the political fray. "I think I'm better suited to what I'm doing today than for the world of politics," she said.
A high-profile trial would be a blow to the unflappable finance tsar, who has worked patiently to restore the image of the IMF after the sex scandal that brought down her predecessor and compatriot Dominique Strauss-Kahn in 2011.
A tough negotiator, Lagarde did not hesitate to cross swords with the very officials she worked closely with in her previous job, criticizing her French successor as economy minister, Pierre Moscovici, of being asleep during one crisis meeting.
Lagarde recently scored two major successes at the IMF: the addition of the Chinese yuan to the Fund's basket of reserve currencies and the passage by the US Congress of long-stalled IMF reforms, for which she had joked she would "do belly-dancing" if needed to get US ratification.