IMF chief Lagarde appears in court in French fraud probe over arbitration deal

IMF Managing Director Christine Lagarde, leaves her apartment building before appearing in French court, in Paris, Thursday, May 23, 2013. Lagarde is being investigated by a special French court over a controversial arbitrage deal, which she oversaw as French Finance minister in 2008. (AP Photo/Thibault Camus) (The Associated Press)

IMF Managing Director Christine Lagarde leaves her apartment building for a French court, in Paris, Thursday, May 23, 2013. Lagarde is being investigated by the special French court over a controversial arbitrage deal, which she oversaw as French Finance minister in 2008. (AP Photo/Thibault Camus) (The Associated Press)

PARIS – International Monetary Fund chief Christine Lagarde has appeared at a special Paris court to face questioning over a controversial arbitrage deal that she oversaw as French finance minister.

The 2008 deal handed about 400 million euros to magnate Bernard Tapie to settle a dispute with state-owned bank Credit Lyonnais over the botched sale of Adidas in the 1990s.

Tapie was close to then-French President Nicolas Sarkozy, who was Lagarde's boss. Critics have said the deal was too generous to Tapie at the expense of the French state.

Lagarde left her Paris apartment Thursday morning and appeared at a special court that handles cases involving government ministers. She has denied wrongdoing.