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Tapie charged as French probe takes new twist

AFP-JIJI

Flamboyant French tycoon Bernard Tapie was charged with fraud Friday in the latest twist in a corruption probe that is threatening to embroil International Monetary Fund chief Christine Lagarde.

After four days of interrogation in custody, Tapie, 70, was hauled before a magistrate and placed under formal investigation on suspicion of committing fraud as part of an organized gang.

The charge, which allowed police to use special detention powers normally reserved for suspected terrorists or mafia, relates to a €400 million ($520 million) state payout Tapie received in 2008 while Lagarde was France’s finance minister.

Lagarde was in charge of the arbitration process that led to the payout and investigators suspect Tapie received preferential treatment in return for his high-profile support for her then-boss, former French President Nicolas Sarkozy.

The payout to Tapie related to a dispute between him and the partly state-owned bank Credit Lyonnais over his 1993 sale of sportswear group Adidas. Tapie claimed Credit Lyonnais had defrauded him by intentionally undervaluing Adidas and that the state, as the bank’s main shareholder, should compensate him.

Lagarde, now managing director of the IMF, was responsible for referring the issue to a three-man arbitration panel, which ruled in Tapie’s favor.

Her chief of staff at the time, Stephane Richard, a member of the panel, along with Pierre Estoup, 86, and Jean-Francois Rocchi, have all recently been charged on the same count as Tapie.

Critics said Lagarde should never have taken the risk of putting the state in a position where it would have to compensate a man with convictions for fiscal fraud, abuse of company assets, false accounting and match-fixing. The IMF chief, who inherited the case and the arbitration plan from her predecessor, has defended her decision as the best solution available.