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Christine Lagarde’s flat raided by French police

Kim Willsher in Paris
guardian.co.uk, Wednesday 20 March 2013 16.30 GMT

Christine Lagarde’s lawyer said the police raid and wider investigation would help exonerate the IMF chief from any criminal wrongdoing. Photograph: Eric Vidal/Reuters
Police have searched the Paris home of the head of the International Monetary Fund as part of a fraud investigation centred on a supporter of former president Nicolas Sarkozy.

Christine Lagarde’s flat was raided along with that of her office manager and the home of businessman Bernard Tapie, a former politician, actor, singer and television celebrity.

The IMF chief has been the subject of preliminary investigations for “complicity in the embezzlement of public funds”, since 2011, when Tapie was awarded €284m of public money in compensation in a financial dispute while she was economy minister.

The search came hours after the French government was rocked by a separate scandal after the budget minister Jérôme Cahuzac was put under criminal investigation amid claims he hid money from the French taxman in a secret Swiss bank account. Lagarde and Cahuzac have vehemently denied any wrongdoing.

Lagarde’s lawyer, Yves Repiquet, said Wednesday’s searches would vindicate his client. “They will serve to establish the truth and will contribute to the exoneration of my client of any criminal wrongdoing,” he told Reuters.

The accusations against Lagarde centre on her role in what is known as the Tapie Affair, a row that has rumbled for two decades, which ended when she made a controversial decision to refer the businessman’s dispute with the public bank Crédit Lyonnais to arbitration. Critics say she abused her authority. Investigators are looking into whether Tapie was given a secret deal in return for supporting Sarkozy during his successful 2007 presidential election campaign.

Tapie, who specialised in picking up and resuscitating bankrupt companies, bought Adidas in 1990 for €243.9m using a loan from a sister company of Crédit Lyonnais, a part state-owned bank and partner in his company Groupe Bernard Tapie.

After being offered a government post in 1992 by the then Socialist president, François Mitterrand, he was ordered to sell the group, including the jewel in its crown, Adidas, the sportswear brand of which he was a major shareholder. Crédit Lyonnais was given the job of selling it.

Tapie, who used to own Olympique de Marseilles football club and was found guilty of match-fixing, later sued Crédit Lyonnais over its handling of the sale. He lost his case in the country’s highest court, but had been appealing against the decision when Lagarde intervened.

Critics say the case should never have been referred for private and binding arbitration because public money was at stake, and that Tapie received considerably more than he would have been awarded by a court. There is no suggestion Lagarde profited personally.

Lagarde, who had ignored objections from colleagues, defended her decision, saying it was “the best solution at the time”. There are concerns that Lagarde, who replaced disgraced Frenchman Dominique Strauss-Kahn as head of the IMF after he was arrested on charges of sexual assault, later dropped, could be forced to resign if she is formally put under investigation.

Cahuzac, the Socialist government minister in charge on clamping down on tax evasion, resigned on Tuesday and was relieved of his public duties by President François Hollande.

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