IMF confident in Lagarde

A statement released by the 24-member panel on Friday said that it continued to have confidence in Lagarde despite the judicial proceedings in France.

"The Executive Board has been briefed on recent developments related to this matter, and continues to express its confidence in the managing director's ability to effectively carry out her duties," the statement said.

The board declined further comment on the case against Lagarde.

"As we have said before, it would not be appropriate to comment on a case that has been and is currently before the French judiciary," the statement added.

A court in Paris placed Lagarde under formal investigation earlier in the week on allegations of "negligence" in a case dating back to 2008, when she was France's finance minister.

Lagarde described the prosecutor's case against her as being "completely without merit" after facing questions from magistrates in Paris on Wednesday. In a statement, Lagarde said that after three years of investigation the court had found no evidence of wrongdoing and that the only allegation against her was "that I was not sufficiently vigilant."

She also said she intended to appeal the court decision and that she was returning to Washington to get on with her duties at the IMF.

2008 arbitration ruling

The allegation of negligence is related to an arbitration ruling in 2008 in which French businessman Bernard Tapie was awarded 400 million euros ($537 million). This came after Tapie had sued the partly state-owned bank Credit Lyonnais for its handling of the sale of his majority stake in Adidas in the mid-1990s. Lagarde had referred the dispute to an arbitration panel, which ruled in favor of Tapie.

Under French law, being placed under formal investigation is approximately equivalent to facing a preliminary charge, and judges can later decide whether to issue a formal charge and send the case to trial or drop the case.

pfd/crh (AFP, AP)