PARIS (Reuters) - The French state legally challenged the 403 million euros ($524 million) arbitration award granted a French tycoon in 2008 after his dispute with now-defunct bank Credit Lyonnais, a lawyer in the case told Reuters on Friday.
The state-controlled body charged with settling the debts of Credit Lyonnais, the Consortium de Realisation (CDR), petitioned the Paris court of appeals to throw out the settlement to Bernard Tapie, said the agency's lawyer, Pierre-Olivier Sur.
Tapie, 70, is a colorful member of France's business and sporting elite with ties to former president Nicolas Sarkozy. He is due to face magistrates on Friday who will decide whether to place him under formal investigation for fraud-related charges. He denies any wrongdoing.
The long-running affair has embroiled members of Sarkozy's former cabinet, such as his former finance minister and now head of the IMF, Christine Lagarde, and could damage the ex-president's ability to mount a political comeback.
Socialist President Francois Hollande, who came to power last year vowing to do away with what he said were unfair advantages accorded the rich and well-connected, had signaled that his government planned to challenge the arbitration.
Investigators are trying to determine whether the close ties between Tapie and members of Sarkozy's inner circle influenced the government's decision in 2007 to turn to a private arbitration tribunal to settle his long-running dispute with Credit Lyonnais.
Tapie claimed the bank defrauded him by buying his interest in sports company Adidas in 1993 for 315.5 million euros only to sell it a year later for 701 million euros.
The arbitration went in Tapie's favor with the 285-million-euro award which, including interest, amounted to 403 million euros.
In order to nullify the arbitration settlement, judges would have to find evidence of fraud. ($1 = 0.7691 euros)
(Reporting by Chine Labbe; Writing By Alexandria Sage; editing by Mark John)