( Updated) IMF chief convicted over payout

Ebun Francis with agency reports

A French court Monday found Christine Lagarde, the International Monetary Fund Chief, guilty of negligence but ruled that she would not be penalised.

As French finance minister in 2008, she approved an award of €404m ($429m; £340m) to businessman Bernard Tapie for the disputed sale of a firm.

Ms Lagarde was in Washington when the court in Paris gave the verdict but she had earlier on friday told the trial she had always acted in good faith.

The story of the trial dates back to a big business deal in the early 1990s that years later led to accusations of cronyism levelled against several leading French figures, including Christine Lagarde.

In 1993, Bernard Tapie had to sell his business interests to become a minister in the then Socialist government.

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When sports goods manufacturer Adidas was sold on his behalf, Credit Lyonnais (CL) bank found buyers for the equivalent of €320m in 1993. The state-owned bank said this was a good price, but investors immediately sold Adidas on for €560m, and Mr Tapie cried foul.

Mr Tapie argued that the bank had deliberately undervalued the company, and pointed out that one of the firms that had flipped Adidas for a huge profit was a subsidiary of CL. He sued the bank for fraud in a court battle that went on for many years.

As finance minister from 2007-11 under centre-right President Nicolas Sarkozy, she played a key role in the initial settlement. In 2007, she decided to refer the long-running case to final arbitration.

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This decision was controversial as Mr Tapie had thrown his support behind Mr Sarkozy in the election.

In 2008 the three-member panel awarded Mr Tapie not just compensation, but also interest and other costs – for a total of €404m ($429m; £340m).

The then Finance Minister, Lagarde declined to challenge the ruling, a decision that lead to an outcry from the public.

They argued that by going to binding arbitration rather than continuing fighting Mr Tapie through the courts, Lagarde was repaying favours.