IMF head Lagarde under investigation over 2008 scandal by Geoffrey Smith @FortuneMagazine August 27, 2014, 8:12 AM EST E-mail Tweet Facebook Google Plus Linkedin Share icons International Monetary Fund managing director Christine Lagarde has been placed under formal investigation by a French court for her role in dating back to 2008. Lagarde, who took over from fellow-Frenchman Dominique Strauss-Kahn at the IMF after the latter was embroiled in allegations of sexually assaulting a hotel maid, is suspected by the court of “negligence” while serving as Finance Minister under former President Nicolas Sarkozy. Specifically, the court’s concerns refer to the €400 million payment that she approved to businessman Bernard Tapie to settle a long-running litigation against Crédit Lyonnais, a state-owned bank that collapsed in the early 1990s after a reckless lending spree. The settlement, in 2008, followed less than a year after Tapie, a former Socialist minister, gave high-profile support to the center-right campaign of Sarkozy in the 2007 presidential elections. Lagarde denies any suggestion of having acted improperly. “I have instructed my lawyer to appeal this decision which I consider totally without merit,” AFP quoted her as saying. In the French judicial system, being placed under formal investigation reflects the court’s belief that a crime has been committed. The Financial Times cited Lagarde’s spokesman as saying that the maximum penalty for the crime in question would be a year in prison. But merely placing someone under investigation doesn’t automatically mean they will be charged.