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Christine Lagarde

PARIS. — A French court yesterday convicted International Monetary Fund chief Christine Lagarde of “negligence” for her role in a controversial €400 million payout to a French tycoon in 2008 while she was finance minister.

The Court of Justice, however, did not hand down a sentence.

Her lawyer said after the ruling that his team would look into appealing the decision.

Lagarde (60), was accused of approving a controversial €400 million ($425 million) payout to businessman Bernard Tapie in an out-of-court settlement when she was finance minister under former president Nicolas Sarkozy.

The chief prosecutor in the trial, Jean-Claude Marin, said last Thursday after a hearing in Paris that the accusations against her for being negligent were “very weak”.

An arbitration panel ordered the payout to Tapie in connection with his sale of sportswear company Adidas.

The panel upheld Tapie’s claim that the Crédit Lyonnais bank had defrauded him by intentionally undervaluing Adidas at the time of the sale and that the state — as the bank’s principal shareholder — should compensate him.

It was Lagarde who, in her role as French finance minister, ordered the case to be heard by an arbitration panel instead of proceeding through the regular courts.

Critics say that Lagarde ensured Tapie received preferential treatment by referring the matter to arbitration as a quid pro quo for his financial support for Sarkozy during his 2007 presidential bid.

They also argue that the state should not have paid compensation to a convicted criminal who was bankrupt at the time and would not have been able to pursue the case in court.

Tapie spent six months in prison in 1997 for match-fixing during his time as president of popular French football club, Olympique Marseille.

Lagarde has always protested her innocence, denying any wrongdoing in the arbitration process, which she says was independent and in the best interests of taxpayers.

Tapie was placed under formal investigation for committing fraud in late June of 2013.

He was ordered to pay back the money starting in December of last year.

The “Tapie affair” has entangled several other high-profile figures, including Sarkozy’s ex-chief of staff Claude Guéant and Stéphane Richard, Lagarde’s former chief of staff at the finance ministry and now chief executive of Orange.

Lagarde was appointed managing director of the IMF in July 2011.

She served as French finance minister from June 2007 and also served as minister of foreign trade for two years. — News Agencies.