Christine Lagarde, the head of the International Monetary Fund, has not been charged after two days of questioning by French judges over alleged complicity in the embezzlement of state funds.
But she has not been completely cleared in the investigation over her authorisation of a controversial out-of-court settlement for the maverick French businessman Bernard Tapie when she was finance minister under Nicolas Sarkozy.
Instead, Lagarde has been placed under the status of "supervised witness". In French legal terms, this is less serious than being placed under formal investigation. It means that in any future hearings she will have to answer questions as a witness with her lawyer. She could technically still be charged later if judges change their minds.
Emerging from two 12-hour days of questioning in Paris, Lagarde said it was "no surprise" to her that she had not been charged "because I always acted in the interest of the state and according to the law". She said she would be returning to Washington to resume her IMF duties.
The case dates back to 2008, when Lagarde, as Sarkozy's finance minister, ordered private arbitration in a long-running business dispute between Tapie and the French state. Tapie is a former Socialist minister and flamboyant business tycoon turned chatshow host who, as head of Olympique de Marseille football team, had served a prison sentence for match fixing. In 2007, he switched political camps and supported Sarkozy. For about 20 years, he had been pursuing legal action through the courts for compensation from the state, accusing the former state bank Crédit Lyonnais of ripping him off in a business deal to sell the sports brand Adidas, which he owned.
Once Sarkozy was in office, Lagarde moved to stop the court action and instead authorised three judges to decide an out-of-court settlement that meant Tapie was awarded a massive €400m in compensation at the expense of the French taxpayer – over €280m of which he pocketed, after tax and costs. The deal sparked outrage, with opposition politicians claiming that Lagarde had deliberately authorised an advantageous settlement procedure to reward Tapie for his support for Sarkozy during the 2007 election campaign.
Lagarde denies any wrongdoing and has said the arbitration was the "best solution", necessary to put an end to a costly legal dispute. She has always denied having acted under orders from Sarkozy.
Lagarde was appointed head of the IMF in 2011 after the former director, Dominique Strauss-Kahn, quit in disgrace.
If Lagarde had been placed under formal investigation in the Tapie case, it would have risked weakening her position and further embarrassing both the IMF and France by heaping more judicial worries on a key figure on the international stage.