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IMF chief Christine Lagarde to be witness, not suspect, in French arbitration case

International Monetary Fund chief Christine Lagarde arrives Friday at a special court house in Paris for a second day of interrogation about her role in the settlement of a multi-million-dollar business dispute when she was French finance minister in 2008. (Thibault Camus/AP)

Christine Lagarde, director general of the International Monetary Fund, wound up more than 25 hours of interrogation Friday night without any accusation being leveled against her for a contested decision to accept arbitration in a multimillion-dollar business case in 2008, during her tenure as France’s finance minister.

Lagarde, who announced the outcome of the proceedings herself, said she was not surprised that judicial authorities decided to retain her as a witness but not to name her as a suspect. “I have always acted in accordance with the interest of the state and in conformity with the law,” she declared.

The judicial step came after two days of intense interrogation by investigating magistrates of the Court of Justice of the Republic, which handles malfeasance cases in France. It signified that the magistrates concluded they do not have credible evidence suggesting Lagarde violated the law when she agreed to have an arbitration panel settle a dispute between the Credit Lyonnais bank and Bernard Tapie, a flamboyant French businessman.

The bank had failed and was taken over for liquidation by the government. In a dispute that previously had been in the courts for some time, Tapie contended that he had been wronged by the bank during the sale of his interests in the Adidas sports equipment company. The arbitration panel awarded Tapie $520 million, a sum widely decried as unjustifiably high but approved by Lagarde.

Lagarde was never suspected of benefiting personally from the award. But as a relatively new minister appointed by Nicolas Sarkozy, then France’s president, she was suspected of acting at the behest of Sarkozy or his aides to give Tapie a break for political reasons.

Lagarde had maintained from the beginning that she took the decision to accept arbitration on her own and not on orders from Sarkozy. She said that attaining the best outcome for the government was her only objective.

“My explanations permitted me to bring the responses to the doubts that arose about my decision at that time,” Lagarde said after the interrogation. “Now it is time for me to return to Washington,” home of the IMF.

Her attorney, Yves Repiquet, said that he had been confident of a favorable outcome. As a witness, Lagarde remains on call if the magistrates want to question her further as the investigation proceeds, he said.

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