French prosecutor calls for IMF's Lagarde to be acquitted

By Chine Labbe

PARIS (Reuters) - The chief prosecutor in the negligence trial of IMF chief Christine Lagarde in Paris called for her acquittal on Thursday, saying the hearing had failed to support the "very weak" case against her.

Lagarde, 60, faces charges, which she denies, of being negligent when, as French finance minister, she approved in 2008 a payout to businessman Bernard Tapie in an out-of-court settlement which cost the French taxpayer 400 million euros ($425 million).

The trial has gone ahead at a special court in Paris even though the state prosecutor's office said, after the conclusion of the investigation of Lagarde, that the case should be dropped.

General Prosecutor Jean-Claude Marin repeated this view on Thursday, saying "These hearings have not sustained already very weak accusations." He called for her acquittal.

"No negligence sanctionable by law can be held against Madame Lagarde," said Philippe Lagauche, another official from the prosecutor's office.

The Republic's Court of Justice, which judges cases involving government ministers and has proceeded with the trial despite the prosecutor's recommendation, is to hand down a verdict on Dec. 19.

The charges allege that Lagarde showed negligence, leading to misuse of public funds, by accepting too easily the costly arbitration settlement with Tapie and not contesting it to the benefit of the state.

Lagarde, who has withstood aggressive questioning in court, said she had accepted the settlement in the best interests of the state and to draw a line under an affair that had dragged on for 15 years. She denied negligence.

The IMF managing director faces up to a year in jail and a fine of 15,000 euros if convicted next Monday. Such an outcome could also raise questions about her ability to hold on to her job at the Washington-based International Monetary Fund.

Marin told the court that he had heard "empty talk" which had not changed his opinion that the case should not have come to court.

Marin warned that if the court reached a decision against Lagarde it would place "a good number of public decision-makers" under threat of prosecution.

Negligence or unfortunate political choice? "Depending on the response that you provide to this question, this court could see a not insignificant increase in its work," Marin said.

Evidence on Wednesday by a former treasury official who was involved in the case at the time painted a picture of cronyism and string-pulling in Tapie's links with the government under Nicolas Sarkozy's presidency from 2007 to 2012.

"You have to make a decision on the very delicate limit between what is political and what is judicial," Marin said on Thursday, apparently referring to a political undercurrent to the trial.

(Writing By Richard Balmforth, editing by Larry King)