International Monetary Fund chief Christine Lagarde, one of the most powerful women in the world, has been put under formal investigation by French magistrates for negligence in a political fraud affair dating from 2008 when she was finance minister. Lagarde, who this week was questioned by magistrates in Paris, said she would contest the move. "I have asked my lawyer to use all recourse against this decision which I consider to be completely unfounded," she told BFMTV on Tuesday. "I am returning to work in Washington this afternoon." Under French law, magistrates place someone under formal investigation when they believe there are indications of wrongdoing, but that does not always lead to a trial.The inquiry relates to allegations tycoon Bernard Tapie, a supporter of conservative ex-president Nicolas Sarkozy, was improperly awarded $531 million in an arbitration to settle a dispute with now defunct, state-owned bank Credit Lyonnais. The inquiry has already embroiled several of Sarkozy's cabinet members and France Telecom CEO Stephane Richard, who was an aide to Lagarde when she was Sarkozy's finance minister.