French police have searched the flat of IMF chief Christine Lagarde in relation to a probe into a supporter of Nicolas Sarkozy.
Ms Lagarde's lawyer said her Paris apartment was examined as part of an investigation into her handling of a 2008 compensation payment to a businessman supporter of the French ex-president.
Police are investigating claims that Ms Lagarde, when finance minister under Mr Sarkozy, acted illegally in approving the 285m euro (£250m) arbitration payout to Bernard Tapie.
Ms Lagarde in 2007 ordered a panel of judges to arbitrate in a dispute between Mr Tapie and the bank Credit Lyonnais, which led to the disgraced tycoon being awarded the payout.
She denies any wrongdoing.
"This search will help uncover the truth, which will contribute to exonerating my client from any criminal wrongdoing," Ms Lagarde's lawyer, Yves Repiquet, told Reuters.
It was conducted a day after France's budget minister resigned after being targeted in a tax fraud inquiry.
Socialist President Francois Hollande came to power last May vowing to crack down on the cozy relationships between politicians and businessmen he said were rife under Mr Sarkozy.
Ms Lagarde was in Frankfurt and not in her Paris flat at the time of the search, a spokesman for the IMF chief said. She arrived in the city on Tuesday for the Frankfurt Finance Summit.
In the last few days, she has been involved in the discussions over the bailout for Cyprus, amid the country's impending bankruptcy.
She joined the finance ministers of the 17 Eurozone countries in weekend discussions that put together a rescue plan for the beleagured island that involved a raid on savings.
She told Time Magazine that the Cyprus crisis risked spreading to other countries.
Yesterday, the rescue plan put together by the Eurogroup and the IMF was rejected by Cypriot MPs, forcing the search for an alternative solution.
The International Monetary Fund refused to comment on the raid on Wednesday.
"As we have said before, it would not be appropriate to comment on a case that has been and is currently before the French judiciary," said IMF spokesman Gerry Rice in a statement made shortly after the raid.
"Prior to its selection of the Managing Director, however, the IMF's Executive Board discussed this issue and expressed its confidence that Madame Lagarde would be able to effectively carry out her duties as Managing Director," Mr Rice said.
Lagarde, previously France's finance minister, was chosen to lead the global crisis lender in 2011 after her predecessor, ex-French politician Dominique Strauss-Kahn, was forced to resign after being arrested in New York in a scandal involving sex with a hotel chambermaid.
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