IMF managing director Lagarde guilty of negligence over arbitration

The International Monetary Fund’s managing director was convicted yesterday of negligence by a special French court for her role in a contentious and generous arbitration award in 2008 to a politically connected tycoon.

But Christine Lagarde, who was France’s finance minister at the time, was spared jail time and a criminal record. She had risked a year of imprisonment and a fine.

The guilty verdict, even without punishment, tarnishes Lagarde’s impressive career as one of the most powerful women in world finance. 0 Christine Lagarde was spared a prison sentence It raised immediate doubts about whether the IMF’S first female managing director will be able to continue in that job she has held since 2011.

The Washington-based IMF said after the verdict that its executive board would meet soon “to consider the most recent developments.”

The case revolves around a €403 million(£339m) arbitration deal given to tycoon Bernard Tapie in 2008 over the botched sale of sportswear maker Adidas in the 1990s. The amount prompted indignation in France.

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

In deciding not to sentence Lagarde, the court noted that the award to Tapie has since been annulled.