Paris home of IMF chief Christine Lagarde searched by police

The Paris home of International Monetary Fund MD Christine Lagarde was searched by the French police, in connection with an arbitration, through which a former supporter of president Nicolas Sarkozy had been awarded $500 million.

The Cour de Justice de la Republique was responsible for looking into the actions of ministers who had been in office and at one point Legarde was finance minister in Sarkozy's cabinet.

The agency was investigating whether she had faltered in agreeing to a settlement to end a dispute involving business tycoon Bernie Tapie.

Legarde's lawyer, Yves Repiquet said that the former finance minister hoped that the search would finally establish the truth leading ultimately to the end of all investigations.

Tapie who had tried his hand at acting and his luck at politics had won a $498-million (€385 million) arbitration award for the settlement of a dispute around the sale of Adidas AG by his company.

Tapie had been awarded €45 million by way of damages, €240 million for his company creditors and around €100 million as interest.

According to critics the case should never have been referred for private and binding arbitration as it involved public money. They say Tapie received considerably more than what he would have been awarded by a court, though there were no allegations of Lagarde profiting personally.

Legarde, the longest-serving finance minister that France, had from the 1970s stood firm in the Tapie case decision and did not appeal it. She had said at that point of time it had been the right choice and the best decision.

Peliminary investigations against the IMF chief have been ongoing since 2011 when Tapie was awarded the money.

The search follows hours after a separate scandal rocked the French government involving budget minister Jérôme Cahuzac.

Cahuzac was put under criminal investigation amid claims he hid money from the French taxman in a secret Swiss bank account. Lagarde and Cahuzac have denied the charges outright.

According to Repiquet, yesterday's searches would vindicate his client. He told Reuters they would serve to establish the truth and would contribute to the exoneration of his client of any criminal wrongdoing.

The Tapie Affair, had been rumbling for two decades, when Legarde made a controversial decision to refer the businessman's dispute with the public bank Crédit Lyonnais to arbitration, to put a close to it.

She was accused by critics of abusing her authority and investigators are looking into whether Tapie was given a secret deal in return for supporting Sarkozy during his successful 2007 presidential election campaign.