IMF chief Lagarde under investigation for negligence

International Monetary Fund chief Christine Lagarde has confirmed she is under official investigation for negligence in a French corruption probe that dates back to her days as finance minister.

In a statement after a fourth round of questioning before magistrates, Ms Lagarde said she was returning to work in Washington later in the day and said the decision was "without basis".

She and her former chief of staff face questions about their role in a €400 million payment to a businessman. The payment was made to Bernard Tapie in a dispute with state-owned bank Credit Lyonnais over the botched sale of sportswear company Adidas.

Critics have said the deal was too generous, and was symptomatic of the cosy relationship between money and power in France.

A source said Ms Lagarde, who earlier was questioned by magistrates in Paris under her existing status as a witness, considered their decision to investigate her for alleged “negligence” was unfounded and would appeal it.

In French law, magistrates place someone under formal investigation when they believe there are indications of wrongdoing, but that does not always lead to a trial. The inquiry into Mr Tapie has embroiled several of former president Nicolas Sarkozy’s cabinet members including Ms Lagarde.

Mr Tapie – who supported former French president Nicholas Sarkozy in the last two elections – was awarded €403 million in a 2008 arbitration payment under Mr Sarkozy's presidency to settle a dispute with the now defunct, state-owned bank Credit Lyonnais over a 1993 share sale.

Ms Lagarde was finance minister at the time.