PARIS, Aug 27 (Reuters) - IMF chief Christine Lagarde has been placed under formal investigation by French magistrates on Wednesday for her alleged role in a long-running political fraud case, a source close to the former French finance minister said.
The source said Lagarde, who earlier was questioned by magistrates in Paris under her existing status as a witness, considered their decision to investigate her for alleged "negligence" was unfounded and would appeal it. A French judiciary source also confirmed the step.
In French law, magistrates place someone under formal investigation when they believe there are indications of wrongdoing, but that does not always lead to a trial.
The inquiry into tycoon Bernard Tapie has embroiled several of former president Nicolas Sarkozy's cabinet members including Lagarde.
Tapie - who supported Sarkozy in the last two elections - was awarded 403 million euros in a 2008 arbitration payment under Sarkozy's presidency to settle a dispute with the now defunct, state-owned bank Credit Lyonnais over a 1993 share sale. Lagarde was finance minister at the time. (Reporting by Chine Labbe; Writing by Ingrid Melander; editing by Mark John)