IMF chief, Christine Lagarde, is investigated over compensation paid to tycoon

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French anti-fraud police have raided the home of a former close associate of the International Monetary Fund chief Christine Lagarde as part of an investigation into alleged abuse of public office and “embezzlement” when she was French Finance Minister in 2008.

Separately, it emerged that an anonymous letter had been sent from inside the French civil service exonerating Ms Lagarde and pointing the finger of blame at the former President Nicolas Sarkozy and a previous Finance Minister, Jean-Louis Borloo.

The investigation concerns the payment of €430m in state compensation to a disgraced French tycoon, Bernard Tapie, in 2008. Three French magistrates are investigating allegations that Ms Lagarde acted improperly when she created an independent panel to end a legal dispute over the seizure of Mr Tapie’s assets, including the Adidas sportswear company, in the 1990s.

Mr Tapie was jailed in 1997 after being found guilty of a number of offences including the fixing of a football match involving the club he owned at the time, Olympique Marseille. Once a left-wing activist and minister, Mr Tapie switched sides after he left prison to back Nicolas Sarkozy in the 2007 presidential election.

Magistrates are investigating allegations that Ms Lagarde , as Finance Minister, intervened improperly to ensure that Mr Tapie received significant compensation for what he claimed was the illegal seizure of Adidas by a state-controlled bank. In 2011, Ms Lagarde was appointed as head of the International Monetary Fund after rape allegations (since dropped) forced the resignation of another former French Finance Minister, Dominique Strauss-Kahn.

Anti-fraud detectives raided the home of Mr Tapie and that of Stéphane Richard, now head of France Telecom, formerly the head of Ms Lagarde’s private office at the finance ministry. Ms Lagarde is expected to be questioned by investigating magistrates in the near future. It is alleged that Mr Tapie was given a sweetheart deal in return for his high-profile support for Mr Sarkozy in the 2007 presidential election.