PARIS (Reuters) - Finance Minister Christine Lagarde questioned on Sunday the legal and factual basis of a call by the public prosecutor for a formal inquiry into her role in a legal settlement, saying some aspects of the charges were false.
Lagarde, favorite to become the next head of the IMF, said it was curious that she had yet to be directly informed of the call for an inquiry into accusations by opposition Socialist Party politicians that she abused her authority in 2008 when she awarded a 285 million euro payout to businessman Bernard Tapie, a friend of President Nicolas Sarkozy.
Speaking on Europe 1 radio, Lagarde said public prosecutor Jean-Louis Nadal's recommendation was "factually, in certain aspects, false, and juridically speaking strangely constructed."
The accusations could hurt Lagarde's chances to win the top position at the International Monetary Fund. She is due to fly to Brazil later on Sunday as part of a campaign to win support from emerging economies for her bid.
She has previously said her conscience is clear over the Tapie case.
Tapie, a former left-wing government minister who switched sides to support Sarkozy's 2007 presidential campaign, was paid to settle a legal dispute with a state-owned bank.
He had accused former state-owned bank Credit Lyonnais of defrauding him during the sale of his stake in sports giant Adidas in 1993 because the final sale price was higher than he had been led to believe.
A French court initially ruled against Tapie in 2006 but the case was still open when Sarkozy won office in 2007.
Bringing the saga to a close, Lagarde agreed to drop the judicial proceedings and submit the case to a private three-member arbitration panel, overruling some in her ministry who argued that it should remain in court.
Lagarde told Europe 1 on Sunday that the prosecutor had made a factual error by stating that she had decided on the arbitration process in May 2007 because at the time she was serving as Agriculture Minister and not as Finance Minister.
"When we start with facts as inaccurate as these, that worries me a little," said the minister.
French judges are due to decide on June 10 whether to launch the formal inquiry into Lagarde's role, a move that will coincide with the deadline for countries to put forward candidates for the IMF job.
Lagarde is seen as a favorite for the job to replace her fellow countryman, Dominique Strauss-Kahn, who quit after his arrest in New York this month on sex assault charges.
Credit Lyonnais was once the world's second biggest bank but got into serious difficulty and was bailed out by the government in the 1990s after running up large losses, leaving the French government with a host of liabilities.
The prosecutor says Lagarde ignored advisers' recommendations to check whether the arbitration was legal and refused recommendations to appeal against the size of the award.
(Reporting by Yves Clarisse and Helen Massy-Beresford; editing by Elizabeth Piper)