PARIS – Is the International Monetary Fund regretting its decision to appoint as its new chief another French citizen? When Christine Lagarde replaced her compatriot, the disgraced Dominique Strauss-Kahn, as managing director of the IMF last year, it was hoped she would bring a more dignified approach to the position after her predecessor became embroiled in one sex scandal after another.
Lagarde certainly looks the part – she's a savvy, sophisticated woman who's regarded as one of the world's leading economists - but her image is in danger of being seriously tarnished after French police raided her Paris home on Wednesday as part of their ongoing fraud investigation into the activities of the controversial tycoon Bernard Tapie.
The 70-year-old Monsieur Tapie is the sort of character the British don't really produce. A charismatic and successful businessman, he is also known as a politician, singer and actor, once appearing in a film entitled Men, Women: A User's Manual. He also spent six months in prison after being found guilty in 1996 of corruption.
Ten years after his release, and having previously served as a Minister of City Affairs under the Socialist government of Francois Mitterand, Tapie came out in support of Nicolas Sarkozy's UMP party in the 2007 French presidential election.
The police investigation in which Madame Lagarde now finds herself embroiled stems from her decision in 2008 to award an arbitration payment of €285m to Tapie when she was Sarkozy's finance minister.
According to news channel France24, investigating magistrates suspect Lagarde of "complicity in embezzling public funds after she overruled objections from advisers" and proceeded with the huge payout to Tapie. If investigators uncover evidence that Tapie was given a deal in return for his support of the UMP, then Lagarde could be placed under formal investigation by French authorities.
The allegations against Tapie go back to the early 1990s when he bought the Adidas sportswear company with money loaned him from a sister company of the then state-owned bank Credit Lyonnais.
The loan arrangement later turned sour and Tapie sued the bank, though he lost the case and was in the process of appealing when Lagarde intervened on his behalf. Lagarde denies any malfeasance on her part, with her lawyer, Yves Repiquet, declaring: "This search will help uncover the truth, which will contribute to exonerating my client from any criminal wrongdoing."
Reaction to the raid has on the whole been muted in the French media, although that might be because their attention is riveted on another case of alleged financial malpractice, this one involving the country's budget minister, Jerome Cahuzac, who resigned on Tuesday after being placed under formal investigation amid accusations he opened a Swiss bank account to conceal money from the French taxman.
Cahuzac protests his innocence but has nonetheless stood down in an attempt to lessen the embarrassment for President Francois Hollande, who replaced Sarkozy last May with a promise to end the often sleazy relations that exist in France between politicians and businessmen.
The timing of the raid on Lagarde's home – cynics are wondering if it's a coincidence that it happened so soon after Cahuzac's fall from grace – couldn't be worse for the IMF chief as she struggles with the fallout over the the handling of Cyprus's bail-out.
Yet earlier this month the fragrant Frenchwoman was lovingly profiled by German magazine Der Spiegel in an article that included the comments of Wolfgang Schäuble. "She can do as she pleases with anyone," gushed the German finance minister. "And the things that she shouldn't do she would never do in the first place. The French can be proud of her." ·