French court orders probe of IMF chief Lagarde

August 4, 2011 - 8:00 AM

PARIS (AP) — A French court has decided to investigate new IMF chief Christine Lagarde's role in a $400 million arbitration deal in favor of a controversial tycoon.

Lagarde was France's finance minister when magnate Bernard Tapie won a settlement in 2008 with a French state-owned bank over the mishandled sale of sportswear maker Adidas in the 1990s.

A commission at the Court of Justice of the Republic decided Thursday an investigation should be launched into Lagarde's role. A prosecutor has said he suspects Lagarde abused her authority in allowing the arbitration.

Lagarde took over as managing director of the International Monetary Fund last month after her predecessor, Dominique Strauss-Kahn, quit to face charges he tried to rape a New York hotel maid.