IMF chief Christine Lagarde has gone on trial in France for negligence over a compensation payment made by a state-owned bank to a businessman in 2008.
As finance minister of then-President Nicolas Sarkozy, she approved an award of €404m ($429m) to Bernard Tapie for the disputed sale of a firm.
Tapie had supported Sarkozy in the 2007 presidential election.
She is accused of allowing the misuse of public funds, rather than corruption. She denies wrongdoing.
The case originates in the early 1990s, when Tapie was a majority shareholder in sports goods company Adidas.
After launching a political career and becoming a cabinet minister in Francois Mitterrand’s Socialist government in 1992, Tapie had to sell the company.
In 1993, he sued Credit Lyonnais, a state-owned bank that handled the sale, alleging that the bank had defrauded him by deliberately undervaluing the firm.
By 2007, the long-running case was referred by Lagarde to binding arbitration. A three-member panel awarded the compensation a year later, causing a public outcry.
Last year, after eight more years of legal wrangling, a French court ruled that Tapie had not been entitled to compensation and should repay the €404m.
Lagarde, 60, is now facing the Court of Justice of the Republic (CJR) on charges of “negligence by a person in position of public authority”.
The court, composed mostly of politicians rather than judges, handles allegations of crimes committed by cabinet ministers.
If convicted, she could face one year in prison.
Lagarde replaced Dominique Strauss-Kahn as IMF managing director in 2011.
Strauss-Kahn – also a former French finance minister – resigned following his arrest in New York on charges of sexual assault that were later dropped.
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