Lagarde ‘perfectly calm’ about impending investigation

On Thursday, Christine Lagarde, managing director of the International Monetary Fund (IMF) said she was "perfectly calm" and "not worried in the least" by the announcement that she is to face an investigation for abuse of authority during her time as French finance minister.

Lagarde made the statement via her lawyer, who said that she "welcomed the opportunity to clear her name" after she was accused of wrongdoing in her handling of a dispute between a bank and a businessman who supported president Nicolas Sarkozy's election campaign.

The French public prosecutor has accused Lagarde of wrongly approving a €285 million ($406 million) payment to businessman Bernard Tapie, a former left-wing minister who switched sides to support Sarkozy in the 2007 presidential election.

Tapie was embroiled in a court battle with the bank Credit Lyonnais. He said the bank had defrauded him in the 1990s, when he sold a stake in Adidas, the sports clothing and equipment business.

The businessman lost the case in France's highest court, but appealed. Lagarde then became finance minister and ignored objections from other officials to intervene in the judicial process, eventually ushering the parties into binding arbitration, when the payment was made. Because parts of the bank were at this point nationalised, Tapie was compensated using public funds.

Lagarde has denied misconduct and said arbitration was necessary to settle the long-running case, but a French court has now said it will look into her role in the process.

There is no evidence she profited personally, but the investigation has come at a difficult time for the IMF, which is desperate to rebuild its reputation after former managing director Dominique Strauss-Kahn resigned in disgrace after being accused of the attempted rape of a hotel employee in New York.

Lagarde was required to undertake several days of mandatory ethics training upon joining the fund, a clear indication that the IMF is keen to avoid any future scandals.

However, for the time being, the IMF is clearly standing behind Lagarde. The fund knew about the possibility of an investigation at the time she was appointed and on Thursday released a statement that said: "The board is confident that she will be able to effectively carry out her duties as managing director."