IMF chief grilled for 2nd day over 2007 payout scandal

Lagarde has downplayed the investigation, but the stakes are high for both her and the IMF

French prosecutors began questioning IMF chief Christine Lagarde for a second day to decide if she should be charged over a state payout to a disgraced tycoon during her time as finance minister.

Lagarde was grilled for 12 hours  yesterday over her 2007 handling of a row that resulted in 400 million euros ($515 million) being paid to controversial business figure Bernard Tapie.

The chic Lagarde, considered one of the world's most powerful women, won respect as France's first female finance minister for her no-nonsense style, intellect and style.

She greeted journalists but did not make any statements upon her arrival at the courthouse today.

Lagarde has downplayed the investigation, but the stakes are high for both her and the International Monetary Fund, which has expressed confidence in its first woman leader.

She could eventually be named an assisted witness, whose status falls between that of simple witness and formal investigation and implies there is some evidence against the person questioned, or placed under investigation -- the closest equivalent in French law to being charged.

Criminal charges against Lagarde would mark the second straight scandal for an IMF chief, after her predecessor Dominique Strauss-Kahn, also from France, resigned in disgrace in 2011 over an alleged assault on a New York hotel maid.

The IMF reiterated its support yesterday, with a spokesman saying: "The executive board has been briefed on that matter, including recently, and continues to express its confidence in the managing director's ability to effectively carry out her duties."

The investigation concerns Tapie, a former politician, who went to prison for match-fixing during his time as president of French football club Olympique de Marseille.

Prosecutors working for the Court of Justice of the Republic (CJR), which probes cases of ministerial misconduct, suspect he received favourable treatment in return for supporting Nicolas Sarkozy in the 2007 presidential election.

They have suggested Lagarde -- who at the time was finance minister -- was partly responsible for "numerous anomalies and irregularities" which could lead to charges for complicity in fraud and misappropriation of public funds.

The investigation centres on her 2007 move 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.