August 4, 2011

PARIS (AFP) – A French court gave the green light Thursday for an embezzlement investigation targeting new International Monetary Fund chief Christine Lagarde, in a case her lawyer branded as politically motivated.

Lagarde, who took up her new post last month, has denied any wrongdoing or illegality in a case which resulted in a big compensation payment for a private businessman out of public funds in 2008 when she was France’s finance minister.

The IMF’s executive board immediately expressed confidence in the 55-year-old, whose immediate predecessor at the organisation, Dominique Strauss-Kahn, resigned after he was accused of attempted rape.

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Gerard Palisse, the presiding judge at the Court of Justice of the Republic, said the tribunal had approved “a judicial inquiry concerning Mrs Lagarde,” in which magistrates would investigate her role in settling the financial dispute.

Such an inquiry can lead to criminal charges, which in this case would be punishable by up to 10 years in prison and a fine of 150,000 euros ($212,000).

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