IMF chief faces court grilling in French corruption probe

International Monetary Fund chief Christine Lagarde is to be grilled by prosecutors investigating a huge state payout to a disgraced tycoon during her time as French finance minister.

Lagarde has been ordered to appear before a special court at the end of May to answer questions over her handling of a dispute that resulted in 400 million euros ($520m) being paid to Bernard Tapie.

Tapie is a former politician and controversial business figure who went to prison for match-fixing during his time as president of France's biggest football club, Olympique Marseille.

Prosecutors working for the Court of Justice of the Republic (CJR), a body established to investigate cases of ministerial misconduct, suspect he received favourable treatment in return for supporting Nicolas Sarkozy in the 2007 and 2012 presidential elections.

After winning the presidency in 2007, Sarkozy chose Lagarde to be finance minister.

Prosecutors have described Lagarde's handling of the case as "questionable" and suggested she was partly responsible for "numerous anomalies and irregularities" which could lead to charges for complicity in fraud and misappropriation of public funds.

Lagarde's Paris home was raided by CJR officials last month but she has not been charged with any crime. The IMF has stood by her and she insisted Thursday that she would be cleared of any wrongdoing.

"There's nothing new under the sun," Lagarde said in Washington. "Ever since 2011 I had known very well that I will be heard by the investigative commission of the Cour de Justice."

Lagarde said the probe "is not going to change my focus, my attention, and my enthusiasm for doing the work that I do."

"I will be very happy to travel to Paris for a couple of days."

In a subsequent interview with France 24 television, Lagarde fended off questions of what she would do if the court found enough evidence to put her under formal investigation.

"I don't want to speculate on the matter," she said.

"It's not about being confident, it's about being certain about what had to be done, what should have been done, about what was appropriate in this case."

"I have a lot to do at the moment. I am not going to speculate."

The investigation centres on Lagarde's 2007 decision to ask a panel of judges to arbitrate in a dispute between Tapie and Credit Lyonnais, the collapsed, partly state-owned bank, over his 1993 sale of sports group Adidas.

Tapie had accused Credit Lyonnais of defrauding him by consciously undervaluing Adidas at the time of the sale and argued that the state, as the former principal shareholder in the bank, should compensate him.

His arguments were upheld by the arbitration panel but critics claimed the state should not have taken the risk of being forced to pay compensation to a convicted criminal who, as he was bankrupt at the time, would not have been able to pursue the case through the courts.

The payment Tapie received enabled him to clear his huge debts and tax liabilities and, according to media reports, left him with 20-40 million euros which he has used to relaunch his business career.

He recently purchased a newspaper group in the south of France and there has been speculation about him re-entering politics as a candidate for mayor of Marseille in 2014.

A charismatic populist, Tapie was a minister under Socialist president Francois Mitterrand but he backed right-winger Sarkozy in the 2007 and 2012 elections.

Lagarde has been the managing director of the International Monetary Fund since 2011, having taken over from her compatriot Dominique Strauss-Kahn who resigned after an alleged sexual assault on a New York hotel maid.

She is the first woman to head the organisation and her appointment was seen as the culmination of a glittering career in law and politics.

After rising to the executive board of US legal consulting giant Baker & McKenzie, she became France's first female finance minister after Sarkozy was elected in 2007.