French Prosecutors Announced Investigations

PARIS – Christine Lagarde, head of the International Monetary Fund, said Wednesday that French prosecutors had announced investigations into an opaque dealings affair dating back to her time as finance minister under President Nicolas Sarkozy.

Ms. Lagarde, who had ruled out wrongdoing from the start, said in a statement the allegations were completely unfounded and that she would be back for work in Washington on Wednesday afternoon. Ms. Lagarde confirmed the decision in a statement but said it was “without foundation.” She would challenge it with a higher court. She and her former chief of staff face questions about their roles in a 400 million euro ($531 million) payment to a businessman.

The payment was made to Bernard Tapie, in a dispute with state-owned bank Credit Lyonnais, over the failed sale of sportswear company Adidas. Critics claim the deal was too generous and came about more because of the relationship between money and power in France.

Sarkozy, who was investigated two months ago, claims any allegations against him were politically motivated. Italy’s Economy Minister Pier Carlo Padoan has said that the Italian government may soon have to reduce its growth forecasts

The Rome government had predicted in April that Italy, which unexpectedly fell back into recession in the second quarter of this year, would see growth of 0.8 percent in 2014. “We have to revise the GDP (gross domestic product) growth forecast downward,” Pier Carlo Padoan said in an interview with the Corriere della Sera daily on Wednesday. That would be a significant step backward for the eurozone’s third-largest economy.

Padoan said Italy would keep the budget deficit below the EU limit of 3 percent of gross domestic product, repeating a promise he and Renzi have made several times before. “The current situation is worse than expected and no one is happy with it, but it draws attention to the fact that we need to keep those acting together,” Padoan said. Italy’s GDP fell 1.9 percent last year and from 2.4 percent in 2012, and it is now at a low since 2000.