PARIS International Monetary Fund chief Christine Lagarde denied any wrongdoing on Friday in her handling of a 2008 compensation payment to a businessman supporter of France's ex-president Nicolas Sarkozy.
Police are investigating claims that Lagarde, when finance minister under Sarkozy, acted illegally in approving the 285 million euro ($381 million) arbitration payout to Bernard Tapie.
They raided Tapie's home on Thursday, along with that of France Telecom chief executive Stephane Richard, who was Lagarde's chief of staff at the time of the settlement.
The inquiry was launched in 2011 following a request from the then opposition Socialist Party.
Lagarde is accused of overruling objections from advisers to settle the case with Tapie, who said Credit Lyonnais had defrauded him in the 1993 sale of his stake in sports clothing group Adidas.
"It (the arbitration) was the best solution at the time and I believe I made the right choice. There is nothing new in the case," Lagarde told France 2 television in an interview at the World Economic Forum in Davos.
Lagarde took over as IMF head in 2011 after her predecessor Dominique Strauss-Kahn stepped down amid allegations of attempted rape that were subsequently dropped.
Tapie, a colorful and often outspoken character, has been prominent in French public life for three decades. He was jailed in 1997 for match-fixing when he controlled soccer club Olympique Marseille.
($1 = 0.7477 euros)
(Reporting By Vicky Buffery; Editing by John Stonestreet)