French court questions IMF chief Christine Lagarde

IMF chief Christine Lagarde has arrived at a court in Paris for questioning over a payout to a controversial tycoon during her time as finance minister.

She is being asked to explain her handling of a row in 2007 which resulted in some 400m euros (£342m; $516m) being paid to Bernard Tapie.

She is appearing before the Court of Justice of the Republic (CJR), which investigates ministerial misconduct.

The IMF chief insists the award was the best solution at the time.

"It's a pleasure to see you," a smiling Ms Lagarde told reporters upon arrival.

She could be placed under formal investigation for the decision to use arbitration, against advice from senior advisers, to settle a long-running court battle between the state and Mr Tapie, a supporter of the then French President, Nicolas Sarkozy.

The case stretches back to 1993 when Mr Tapie, a colourful, controversial character in the French business world, sold his stake in sports company Adidas to Credit Lyonnais, the BBC's Christian Fraser reports from Paris.

Soon after the bank sold on that stake for a much bigger profit, Mr Tapie claimed they had defrauded him.

In 2007, President Sarkozy suggested the finance ministry - which had been overseeing the dispute and was led by Ms Lagarde - should move the case to arbitration.

Mr Tapie won a much bigger payout than he might have expected in court.

Ms Lagarde is not accused of profiting from the payout but she is being questioned over the misuse of public funds.

If she is placed under formal investigation it is of course embarrassing, our correspondent adds. It is a step closer to trial but it does not necessarily mean