IMF chief Christine Lagarde convicted over tycoon payout

International Monetary Fund chief Christine Lagarde has been found guilty by French judges of negligence for failing to challenge a €404 million state arbitration payout to a business tycoon in 2008 when she was French finance minister.

Lagarde had decided to allow a dispute over flamboyant businessman Bernard Tapie's sale of the Adidas sports brand to Credit Lyonnais bank to be resolved by an unusual private arbitration panel, instead of through the courts.

Lagarde was tried by the Court of Justice of the Republic (CJR) on charges of "negligence by a person in position of public authority". She was accused of allowing the misuse of public funds, rather than actual corruption.

Lagarde has denied the negligence charges, arguing in evidence on Friday she had acted in good faith in approving the payment to Tapie to settle the row. She said her sole aim had been "to defend the general interest".

Lagarde was not present in the court in Paris for the verdict, having left France for Washington.

Despite the possibility of facing a one-year prison sentence and a €15,000 fine in the case of a guilty verdict, Lagarde was not handed a punishment in the case on her decision to allow the rare out-of-court arbitration payment.

"The context of the global financial crisis in which Madame Lagarde found herself in should be taken into account," Martine Ract Madoux, the main judge, said, explaining the absence of any sentence.

She also cited Lagarde's good reputation and international standing as reasons why the court did not hand down a punishment.

Nevertheless, her lawyer said his team would look into appealing against Monday's verdict, Reuters news agency reported.

The ruling risks triggering a new leadership crisis at the International Monetary Fund after Lagarde's predecessor Dominique Strauss Khan resigned in 2011 over a sex assault scandal.