IMF boss to face trial over €400m Paris payout

Examining judges overruled a call from the chief prosecutor to drop the case. They said that Ms Lagarde, 59, should face a court to explain why she approved the 2008 payment, despite queries raised by her officials.

The payment was made on advice from an arbitration tribunal to compensate for losses in a dispute with the Credit Lyonnais bank. The claim arose from the 1993 sale of the sportswear company Adidas, which was controlled by Mr Tapie.

Ms Lagarde, a lawyer by profession, said that she would appeal against the decision.

Yves Repique, her lawyer, called the decision incomprehensible.

The IMF said that it stood by Ms Lagarde. In a statement, the managing-director’s office of the organisation said: “Ms Lagarde would like to reaffirm that she acted in the best interest of the French state and in full compliance with the law.”

The former minister was charged with negligence in August last year for allegedly failing to challenge an award that was prejudicial to the state. An appeal court ruled two weeks ago that the compensation was wrongly paid and ordered Mr Tapie — a colourful figure who has been a singer, actor, MP, Socialist minister and a chairman of Olympique Marseilles football club — to refund it.

Ms Lagarde was finance minister under Nicolas Sarkozy at the time of the compensation award. Investigators suspect that Mr Tapie was favoured in return for his backing of the former president’s 2007 election campaign. Five people, including former aides to Mr Sarkozy, face the more serious charges of fraud in an organised group.

Ms Lagarde did not follow the advice of her own ministry to challenge the arbitration tribunal decision.

The trial will be held at the Court of Justice of the Republic, which judges ministers for offences committed in office.

There is no suggestion that Ms Lagarde, who has earned high praise internationally for her conduct at the IMF, profited personally from her approval of the Tapie arbitration.

It is the second criminal case against a French IMF chief in four years. In February Dominique Strauss-Kahn, Ms Lagarde’s predecessor at the IMF, was tried in Lille on charges of pimping. He was acquitted after a ten-day trial.