Police in France investigating an enormous payout to a friend of the former president Nicolas Sarkozy have searched the flat of Christine Lagarde, who was finance minister at the time. Lagarde now heads the International Monetary Fund, but in 2008 she approved the payout to businessman Bernard Tapie to end a long-running legal case he was fighting against the Credit Lyonnais bank, which was state-owned at the time. The bank had sold the sports giant Adidas – owned by Tapie’s group – for much more than Tapie had received. To end the litigation, Lagarde approved a 285-million euro payment in 2008, when Credit Lyonnais was still part-owned by the state. Investigating magistrates suspect her of taking part in embezzlement of public funds. Tapie is a colourful character. A multi-millionaire who has served time for dodgy financial dealings, he has also dabbled in politics, as well as the music industry and films. Christine Lagarde has repeatedly denied any wrongdoing in the Tapie affair. An IMF spokesman said she was in Frankfurt at the time her flat in Paris was searched.