Could Bernard Tapie bring down his friend Nicolas Sarkozy?

Bernard Tapie has lived many lives in his 70 years:business tycoon, pop singer, television presenter, actor, racing driver, yachtsman, football executive, writer, politician, jail-bird.

Outside his native France, Tapie is best remembered as the football boss who bribed opposition players to take it easy against his club, Olympique Marseille, in the last French league match before the European Cup final in 1993. He served eight months in prison.

Mr Tapie is now at centre of a much larger alleged scandal – “une affaire d’etat” or “state scandal” according to Le Monde – with a cast that ranges from former President Nicolas Sarkozy to the IMF chief Christine Lagarde and Stéphane Richard, head of the French telecommunications giant Orange.

Among the many alleged scandals generated by Mr Sarkozy’s five years in the Elysée Palace, the “affaire Tapie” once appeared relatively anodyne and obscure. It may now overtake the “affaire Bettencourt” and the “affaire Gaddafi” as the most destructive single legal threat to the “retired” President’s reputation and his hopes of an unprecedented political resurrection in 2017.

French investigating magistrates believe that they have uncovered evidence of a conspiracy instigated by Mr Sarkozy to enrich his friend Mr Tapie, at the state’s expense. A decision by a supposedly independent three-man arbitration panel in July 2008 to award €403m to Mr Tapie – to settle a 15-year dispute with the state – was pre-cooked by Sarkozy’s Elysée Palace, the magistrates believe.

Three people have already been placed under formal investigation, including Mr Richard, the Orange chief, and an octogenarian retired judge, Pierre Estoup, who chaired the panel. Sarkozy’s former chief of staff and interior minister, Claude Guéant will also be questioned, and could be under investigation in the next few weeks.

Christine Lagarde, the much-respected IMF chief, was questioned for 24 hours over two days last month about her role in the Tapie affair while she was French finance minister from 2007 to 2011. She emerged finally as a “witness” rather than a “suspect”.

It became clear from a leak of her testimony to Le Monde this week that Ms Lagarde, had, in effect, turned Queen’s evidence. She pointed the finger of blame at former colleagues and especially at Mr Richard, who was previously the head of her private office at the finance ministry.

She said that important information was withheld from her, and a letter was signed in her name. On the retired judge, Mr Estoup, she said: “I had no reason at the time to doubt his impartiality… Now, in retrospect, with the information you have given me, I have a different opinion.”

The “information” was that Mr Estoup had had friendly relations with Mr Tapie and his lawyer for many years; that Mr Richard knew all about that but did not inform her; that the Elysée Palace also knew and had been working, with the help of Mr Richard, to engineer a good outcome for Mr Tapie’s interminable legal action against the state for many months.

Whether the investigation will also extend to Mr Sarkozy remains unclear. He enjoys legal immunity for all his official decisions and actions at the Elysée (except for high treason).

According one line of inquiry, however, Mr Sarkozy’s involvement in the alleged conspiracy began in 2004 when he was Finance minister. He could, therefore, be hauled before the special court which investigates alleged ministerial wrongdoing.

In any case, the law is one thing, politics another. If Mr Sarkozy’s right-hand man, Mr Guéant, is proved to have been involved, Sarkozy’s political goose will be cooked.

One thing that remains unexplained by the many leaks and accusations is why Mr Sarkozy should have – allegedly – gone to such trouble.

The former president says that he had no particular connection with the tycoon and former left-wing politician. His supporters insist the arbitration was simply a prudent settlement of a legal dispute which might eventually have cost the state billions, rather than hundreds of millions.

The investigating magistrates have, however, turned up records of 22 visits by Mr Tapie to the Elysée Palace in 2007 and 2008. They have found a note sent by Mr Sarkozy to Mr Tapie after his father’s death in 2010, signed “your friend”. Witnesses have described Tapie’s joy when Mr Sarkozy was elected in May 2007. “I’ve got my dosh,” he is reported to have screamed.

Mr Tapie had “changed sides” during the 2007 election campaign - was the support of a disgraced, former left-wing minister worth €403m?

Another complication is the fact that Mr Tapie had a pretty good case. There is considerable evidence that he was swindled, and unfairly pushed into bankruptcy, by the now defunct state-owned bank Crédit Lyonnais in 1993-1994. On the other hand, Mr Tapie had, on several occasions, been ready to settle his claim for far less than what he eventually received.

Bernard Tapie was born into a modest Parisian family in 1943. He was briefly a failed pop singer and a Formula Three racing driver. From the late 1970s he made a fortune by buying bankrupt companies for one franc, renegotiating their debts, laying off part of their workforce and reselling them for vast profits.

By the early 1990s he had become the 20th richest man in France. He was also a celebrity, presenting an Apprentice-like television show.

He took over Olympique Marseilles and the failing German sportswear company, Adidas, the fortunes of which he quickly restored.

He became an important political voice – one of the few people prepared to take on the National Front leader Jean-Marie Le Pen on live television.

When he became “minister for deprived suburbs” in 1992 under President François Mitterrand, Tapie asked his bank, Credit Lyonnais, to sell Adidas. The bank declared that it had achieved his minimum price of the equivalent of €470m. It concealed the fact that it had sold Adidas to itself through off-shore companies.

Credit Lyonnais resold the company for a €400m profit. It also broke another agreement, pushing him into bankruptcy and making it impossible for him to sue them. Shortly afterwards, the Olympique Marseille bribery scandal broke and Credit Lyonnais itself almost went into bankruptcy

According to the documents leaked to Le Monde, the examining magistrates believe that from 2007 – and possibly from 2004 when Sarkozy was finance minister – there was a “conspiracy” to give Tapie a sweetheart deal. After Sarkozy was elected president in 2007, the magistrates believe, the plot was initiated by the Elysée and carried out by, amongst others, Stéphane Richard and Pierre Estoup.

If this did happen, why it happened remains unclear. There is no suggestion that anyone got a kick-back. Tapie himself is not under investigation.

One intriguing aspect of the affair is the similarity between Tapie and Sarkozy: both brash and brassy men, who came from modest backgrounds into the French elite. In Tapie, Sarkozy possibly saw a reflection of himself. A case of the bling leading the bling?

Lagarde’s plea to Sarkozy

Magistrates investigating the Tapie scandal have seized upon a letter written by the IMF chief Christine Lagarde declaring her undying allegiance to Nicolas Sarkozy.

The letter – handwritten at an unknown date – urges Mr Sarkozy to “use me for as long as you wish and as long as I fit in with your actions and your casting plans”.

The subservient tone of the letter jars with Ms Lagarde’s cool public image, and her attempts to distance herself from the actions of the Sarkozy administration in her testimony to magistrates last month. The letter appears to have been written soon after Mr Sarkozy’s election as President in May 2007.

Affaire d’etat: Key players

Bernard Tapie, 70

tycoon, politician, pop-singer, actor and much else, received a €403 windfall in July 2008 in settlement of a 15 year dispute with the French state. Was there a “conspiracy” to enrich him?

Nicolas Sarkozy, 58

Believed by investigating magistrates to have initiated a “conspiracy” to “defraud the state” to help his friend, Tapie. He may be protected by presidential immunity.

Christine Lagarde, 57

The IMF chief was French finance minister at the time. During a grilling by magistrates last month, she pointed the finger of blame at the head of her private office and at the Elysée.

Pierre Estoup, 86

The retired judge led a supposedly independent three-man panel which arbitrated in Tapie’s dispute. It now emerges that he had known Tapie and his lawyer for years. He is under formal investigation for “conspiracy to defraud”.

Stéphane Richard, 53

Chief executive of Orange, the French telecoms giant, was head of Ms Lagarde’s private office in 2008. He is also under investigation.