IMF chief Christine Lagarde denied on Thursday any wrongdoing in the settling of a 2008 fraud case after police stepped up their investigation into the affair, searching the home of her former chief of staff, France Telecom CEO Stéphane Richard.

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Christine Lagarde denied any wrongdoing Thursday for approving a 400 million euro payout to controversial business mogul Bernard Tapie - a close ally of then president Nicolas Sarkozy - in 2008 when France’s finance minister, as police stepped up their probe into the affair.

The International Monetary Fund chief spoke out after a police raid on the home of her former chief of staff, Stéphane Richard, who is now the CEO of France Telecom.

“It [the arbitration] was the best solution at the time and I believe I made the right choice,” Lagarde told France 2 television at the World Economic Forum in Davos, adding that she would cooperate with the authorities if and when needed to do so.

Lagarde is accused of overriding objections from advisers in settling the case with Tapie, who said that French bank Credit Lyonnais – then part state owned – had defrauded him in the 1993 sale of his stake in sports giant Adidas. Lagarde brought a swift end to the two-decade battle by settling out of court – a decision which led to the €285m payout, plus interest paid by taxpayers, to the business mogul.

‘Nothing new’

Lagarde said Thursday that “there is nothing new in the case” when queried about the raid, carried out by the brigade financière the French police force which investigates white-collar crime. Police were seen raiding the home of Richard - whose wealth in 2009 was estimated at 35 million euros by Challenges business magazine - on Thursday.

Police also raided the home of Tapie on Thursday.

Lagarde herself has yet to questioned by investigators. However, Socialist President François Hollande said in May 2011, “Everybody knows Lagarde was not behind this.” Hollande has instead pointed the finger of blame at Nicolas Sarkozy, who was president at the time of the settlement. Prominent Socialist Ségolène Royale (his former partner) was less cryptic and stated bluntly, “This was an order from Sarkozy.”

The inquiry was launched in 2011 following a demand by the (then opposition) Socialist Party.

Lagarde was made chief of the International Monetary Fund in 2011 after a scandal of another kind brought down her predecessor, Dominique Strauss-Kahn, who was accused of attempted rape. The charges were later dropped.

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