IMF chief Lagarde a 'supervised witness' over payment

French magistrates decided not to place IMF chief Christine Lagarde under formal investigation over her role in a 285 million euro (£244 million) arbitration payment made to a supporter of former president Nicolas Sarkozy.

Lagarde instead was given the status of a "supervised witness" after two full days of questioning on her 2008 decision as Sarkozy's finance minister to use arbitration to settle a legal battle between the state and businessman Bernard Tapie.

The decision removes a headache for Lagarde, the only French national heading a major international institution today, and for the International Monetary Fund (IMF), for which a formal investigation of her would have been highly embarrassing.