IMF chief Lagarde proclaims innocence in French payout case

International Monetary Fund (IMF) chief Christine Lagarde proclaimed her innocence in a Paris court Monday at the start of her trial on accusations of negligence for allowing a huge payout to a well-connected businessman when she served in the French government.

Lagarde told the court she does "not feel guilty of any negligence whatsoever" and that she "acted in conscience and confidence, in the general interest of public affairs".

Lagarde, a former French finance minister, entered the courtroom smiling and stood for a few minutes at the request of photographers and cameramen who wanted to capture the scene. She took notes as the judge summed up the years-long legal saga that led to charges against her. She faces up to a year in prison if convicted.

A lawyer for Lagarde, Patrick Maisonneuve, pleaded for a delay in the proceedings, arguing that it doesn't make sense for her to face trial while a separate investigation in the broader case is still under way. After a short deliberation, the court decided to proceed.

Lagarde took advantage of the first question from the presiding judge to make a statement to the court.

"Have I been deceived, or have several of us been deceived? I would like to know," she asked, suggesting she may have been misled by ill-intentioned people. She did not say whether she was referring to her advisers.

The case revolves around a €403-million (US$425-million) arbitration deal given to tycoon Bernard Tapie in 2008 over the botched sale of sportswear maker Adidas in the 1990s, when LaGarde was finance minister. The amount of the award prompted indignation in France.

Investigators suspect the process was rigged in favour of Tapie, a business magnate with close connections with political circles, including then President Nicolas Sarkozy.

Civil courts have since quashed the unusually generous award, declared the arbitration process and deal fraudulent and ordered Tapie to pay the money back.

Lagarde is accused of "serious negligence" that allegedly allowed other people in the case to commit a suspected major misappropriation of public funds.

Investigating judges contend that Lagarde committed a series of serious errors when she made the arbitration choice and again when she later refused to challenge the deal, suggesting she may have been influenced by the political connections between Tapie and Sarkozy, according to court documents.

"Ms Lagarde's behaviour proceeds not only from a questionable carelessness and precipitation, but also from a conjunction of faults which, by their nature, number and seriousness, exceed the level of mere negligence," the judges wrote at the end of their investigation.

Maisonneuve said on Europe 1 radio that Lagarde, then a government minister, was just following instructions from her administration, and didn't have time to read all 15 years of legal files in the case.

"I really don't see what kind of negligence she can be blamed for," he said after Monday's hearing.

Another of her lawyers, Christopher Baker, said outside the courtroom, "It's clear that she acted in good faith. She was acting in the interest of the state and she relied, as she should, on her advisers and members of her ministry."

Lagarde is being tried in the Court of Justice of the Republic, a special court for government ministers, made up of three professional magistrates and 12 members of the French Parliament. She was asked to declare her identity, age, address, professional activity and salary. She answered: US$450,000 a year.

The trial is due to last until December 20.

Lagarde's trial and possible conviction may raise concern about her ability to remain the head of the IMF. The Washington-based institution's credibility was already shaken when her predecessor, Dominique Strauss-Kahn, also a French citizen, was forced to resign amid sexual assault allegations in 2011.

The IMF's board has so far supported Lagarde at all stages of the French legal proceedings, which began the month after her appointment in July 2011.

Lagarde, the first woman to become finance minister of a Group of Eight country and to be appointed IMF chief, has said she is taking time off her job during her trial.

- AP