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Former Lagarde aide charged in graft case

An aide to Christine Lagarde when she was France's finance minister was placed under formal investigation for fraud allegedly committed during Lagarde's time in office.

Stephane Richard, now head of telecoms giant Orange, faces up to ten years in prison and a €1 million fine, according to a report Thursday by AFP.

Lagarde, left, has been managing director of the IMF since July 2011.

Last month, she was named as a key witness in the case but is not yet a defendant.

In France, targets of a formal investigation are put on trial. Key witnesses aren't put on trial but prosecutors can later charge them.

The directors of Orange, formerly known as France Telecom and partly owned by the French government, are meeting soon to decide Richard's furture.

'Richard was Lagarde's chief of staff when, in 2008, she sanctioned a state payout of €400 million ($530 million) to disgraced tycoon Bernard Tapie,' AFP said.

Tapie, the former president of France's Olympique Marseille football club, spent time in prison for match fixing.

After he sold Adidas, he said French bank Credit Lyonnais had cheated him by intentionally undervaluing the company. He asked for compensation from the French government, which holds a stake in Credit Lyonnais.

Lagarde referred his case to a three-person arbitral panel that ordered the €400 million payout.

She's now suspected of having 'rigged the process that led to the payout, thus ensuring Tapie would get the cash in return for supporting her boss, Nicolas Sarkozy, in his successful 2007 presidential election campaign,' AFP said.

Last month, one of the arbitrators that made the award to Tapie, Pierre Estoup, 86, was named as a defendant in the case, AFP said.

Lagarde was questioned for two days in May. She maintains her innocence and has said she acted in the best interests of France.