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A French court has placed the head of the International Monetary Fund, Christine Lagarde, under formal investigation over her involvement in a corruption probe when she served in the cabinet of President Nicholas Sarkozy.

The inquiry was launched after Lagarde underwent 15 hours of questioning by the French Court of Justice of the Republic, a spokesman told the Financial Times. She is under investigation for "negligence" during the arbitration process, which resulted in a panel awarding the equivalent of $527 million to the French entrepreneur and politician Bernard Tapie in 2008.

At issue is Lagarde's decision, as the French finance minister, to refer Tapie's case to a binding arbitration panel rather than keep it in the traditional courts, according to The Wall Street Journal.

The French court had initially regarded Lagarde as merely a witness in its probe, but on Tuesday it made her a suspect.

Lagarde instructed her lawyer to appeal the move, which she said in a statement to Agence France-Presse was "without merit."

After three years of procedure, the sole surviving allegation is that through inadvertence or inattention I may have failed to intervene to block the arbitration that brought to an end the longstanding Tapie litigation."

The IMF board did not comment on the decision other than to say it would be briefed by Lagarde upon her return to Washington, The Journal reported. Lagarde, 58, became managing director of the IMF in 2011.

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