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The Boston Globe

Business

IMF chief testifies about finance ministry role in arbitration case

Christine Lagarde

Christine Lagarde

PARIS — Christine Lagarde, managing director of the International Monetary Fund, submitted to more than 12 hours of interrogation Thursday about her role in the settlement of a multimillion-dollar business dispute when she was France’s finance minister in 2008.

Lagarde was ordered to return Friday for more grilling by a trio of investigating magistrates at the Court of Justice of the Republic, a judicial panel that handles malfeasance cases in France.

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The magistrates were querying Lagarde, 57, about her actions during a $520 million settlement granted by an arbitration board to the maverick French businessman Bernard Tapie. The payout ended a long and involved legal dispute between Tapie and the Credit Lyonnais as the bank was being liquidated.

At the end of the interrogation, Lagarde could be retained as a witness as the investigation proceeds or, if the magistrates deem they have credible evidence warranting such a step, they could cite her as a suspect in malfeasance. This would raise the question of whether Lagarde could remain as head of the IMF, the Washington-based financial institution that plays a major role in the world economy, including anticorruption efforts in financially ailing countries.

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