Christine Lagarde was President Nicolas Sarkozy's finance minister in 2008
- She approved a deal by which tycoon Bernard Tapie was given £338m handout
- Tapie is a colourful character and a former owner of Olympique Marseille FC
IMF chief Christine Lagarde goes on trial over 'negligent' £338million state payout to tycoon but insists it was 'in the state's interest'
International Monetary Fund chief Christine Lagarde went on trial today, accused of negligence for allowing the French government to give Adidas tycoon Bernard Tapie a £338million bailout.
Lagarde, 60, faces up to a year in prison if convicted of the charge, which dates from 2008, when she was France's finance minister under President Nicolas Sarkozy.
The case revolves around a 403million euro (£338million) payout to tycoon Bernard Tapie over the botched sale of sportswear maker Adidas in the 1990s.
The amount of the award, agreed by an arbitration panel and confirmed by Lagarde, prompted indignation in France when it was revealed.
Lagarde said at today's hearing: 'I would like to show you that I am in no way guilty of negligence, but rather that I acted in good faith with only the public interest in mind.
'Was I negligent? No. And I will strive to convince you allegation by allegation.'
Investigators suspected the process was rigged in favour of Tapie, a business magnate and former owner of Olympique Marseille football team, who had close connections with political circles, including then President Sarkozy.
Civil courts have since quashed the award, declared the arbitration process and deal fraudulent and ordered Tapie to pay the money back.
Lagarde's trial and possible conviction may affect her ability to remain the head of the IMF.
Bernard Tapie (left, in the suit) was the owner of Olympique Marseille when they won the 1993 Champions League final against AC Milan. But he was later accused of fixing matches, although not the final itself
The Washington-based institution's credibility was shaken when her predecessor, Dominique Strauss-Kahn, who was also French, was forced to resign in 2011 amid sexual assault allegations involving a chambermaid at a New York hotel.
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 say Lagarde committed a series of serious errors when she made the arbitration choice and when she refused to challenge the deal, suggesting she may have been influenced by the political connections between Tapie and Sarkozy, according to court documents.