International Monetary Fund managing director Christine Lagarde has been questioned by a magistrate in Paris over her role in a huge arbitration payment that was made to a supporter of former president Nicolas Sarkozy.
The payment of €400 million was made when Ms Lagarde was finance minister of France. She insists that the award was the best solution at the time.
The BBC reports Ms Lagarde could be placed under formal investigation - a significant step under French law.
Her decision to use private arbitration was made against the advice of senior advisers to settle a dispute between the state and high-profile businessman Bernard Tapie, who sold his stake in Adidas to Credit Lyonnais in 1993.
Soon after, the bank sold the stake for a much bigger profit, and Mr Tapie claimed they had defrauded him.
In 2007 Mr Sarkozy, who was president, suggested that the case should be heard by arbitration.
Ms Lagarde is not accused of profiting from the payment.
