Christine Lagarde’s Paris apartment searched in Bernard Tapie probe

French police have searched the Paris apartment of IMF chief Christine Lagarde, as they investigate her role in awarding financial compensation to businessman Bernard Tapie in 2008.

As finance minister, Christine Lagarde referred Bernard Tapie’s long-running dispute with bank Credit Lyonnais to an arbitration panel, which awarded him 400 million euros damages.

Bernard Tapie was a supporter of ex-President Nicolas Sarkozy.

Critics say Christine Lagarde abused her authority but she denies any wrongdoing.

“This search will help uncover the truth, which will contribute to exonerating my client from any criminal wrongdoing,” Christine Lagarde’s lawyer, Yves Repiquet, told the Reuters news agency.

Investigators suspect Bernard Tapie was granted a deal in return for his support of President Nicolas Sarkozy in the 2007 election.

There is speculation in France that Christine Lagarde could yet be placed under formal investigation in this case.

The origins of the case date back 20 years.

Bernard Tapie, who has long been active in French business, sporting and political circles, sued Credit Lyonnais over its handling of the sale in 1993 of sportswear brand Adidas, in which he was a majority stakeholder.

After years in the courts, the case was referred by Christine Lagarde to an arbitration panel in 2007 and she approved its decision to award damages.

Critics said the case should not have been settled by private arbitration, since public money was at stake in the bank, which was part-owned by the state.

The settlement Bernard Tapie received is believed to be a far greater sum than he would likely have received from the courts.

In an interview in January, Christine Lagarde stood by her decision, saying it was “the best solution at the time”.

Christine Lagarde replaced the disgraced IMF head Dominique Strauss-Kahn, who was arrested in New York in 2011 on allegations of attempted rape.

Dominique Strauss-Kahn’s lawyers settled a civil case for an undisclosed sum and a criminal investigation was dropped by US prosecutors last year.

However, Christine Lagarde’s position at the IMF could be in jeopardy if she is placed under formal investigation.

Christine Lagarde’s term as IMF chief does not expire until 2016, but amid the complexities of Europe’s economic crisis this is a distraction she can ill afford.

Bernard Tapie case

• 1993: Credit Lyonnais bank handles sale of Adidas, in which Bernard Tapie is a majority stakeholder
• 1993-2007: Court battle drags on as Bernard Tapie claims Credit Lyonnais undervalued the sale and that he was cheated following the winding-up of the once publicly-owned bank
• 2007: Bernard Tapie, a former Socialist, switches to support Nicolas Sarkozy in the presidential election. Christine Lagarde, Nicolas Sarkozy’s finance minister, intervenes in the Tapie case to order binding arbitration
• 2008: Special panel of judges rules Bernard Tapie should receive damages of 285 million euros (400 million after interest added)
• 2011: Public prosecutor recommends judicial investigation into her actions