PARIS - French magistrates formally opened an investigation into IMF chief Christine Lagarde on Tuesday for possible misconduct in approving a huge payment to a friend of President Nicolas Sarkozy when she was finance minister.
Lagarde faces investigation for complicity in embezzlement of public funds for approving a 285-million-euro settlement to Bernard Tapie in 2008 when she was finance minister. Tapie said that a former state-owned bank had defrauded him in the sale of his stake in sports clothing business Adidas in 1993. He lost the case in France's top court in 2006 and was appealing the decision when Sarkozy won power in 2007.
Lagarde, who denies any misconduct, overruled objections from some ministry officials to drop the judicial case and pressed ahead with the arbitration, arguing it was needed to resolve the long-running case swiftly.