LILLE, France (Reuters) - Former IMF chief Dominique Strauss-Kahn was placed under formal investigation on Monday by authorities looking into a suspected prostitution ring in the French city of Lille, his lawyer said, following a day of questioning by judges in a closed courtroom.
The investigation on suspicion of complicity in a pimping operation is the latest judicial headache for the Socialist ex-finance minister. The move could lead to a trial but it falls short of charging him.
Strauss-Kahn, 62, who was a strong contender to be France's next president until he was hit with sex-assault charges, now-dismissed, in New York last May, was allowed to leave the court after being questioned by three judges in the case.
The Lille prosecutor's office said in a statement he was required to post 100,000 euros ($133,300) in bail. He is forbidden to contact witnesses, the press, and others involved in the prostitution case, it said.
Outside the courthouse, Strauss-Kahn's lawyer, Richard Malka, said his client was innocent.
"He states with the strongest firmness to be guilty of none of these acts and in particular to not have had the least awareness that certain women he met could have been prostitutes," Malka told the press.
"Having relations with an escort does not constitute a crime and is a matter of private behavior, perfectly legal among adults," he added.
The Lille case centers on allegations that a prostitution ring organized by Strauss-Kahn's business associates supplied clients at the city's Carlton Hotel.
Already in the case, eight people, including two Lille businessmen and a police commissioner, have been arrested, and construction firm Eiffage fired an executive suspected of using company funds to hire sex workers.
Judges had the option of putting him under investigation for having potentially benefited from misappropriated company funds if he knowingly attended prostitute sessions paid for by his executive friends using expense accounts.
Instead, the investigation will focus on the pandering angle, and whether Strauss-Kahn was aware that the women at the parties were prostitutes supplied by pimps.
In itself, using prostitutes is not illegal in France.
The highly-anticipated hearing was originally scheduled for Wednesday but was moved up by two days for unknown reasons.
Under French law, "juges d'instruction," which are a cross between investigating prosecutors and criminal magistrates, notify the accused they are under investigation and can hold the person if they believe it warranted. It is they who later decide whether to send the case to court.
Strauss-Kahn - who is now jobless and lives a life behind closed doors in Paris - previously has denied the allegations, arguing he was unaware women he met at parties organized by business associates in Lille, Paris and Washington were prostitutes.
Strauss-Kahn went from being a highly respected politician to being hounded in the world's media after a New York hotel maid accused him of trying to rape her. The charges were dropped after prosecutors decided the maid's testimony was unreliable.
But Strauss-Kahn, later was hit with a separate sexual assault accusation in France and on Wednesday his lawyers will be in a Bronx courtroom fighting a civil lawsuit brought against him by the hotel maid.
PROTESTS UNDERMINE COMEBACK
Strauss-Kahn has been seeking to restore his reputation as a top global economist by speaking at conferences, but cancelled an appearance at an event in Brussels on Tuesday following protests from European members of parliament (MEPs).
He was due to speak at a debate of young MEPs alongside Jean-Claude Juncker, who chairs the Eurogroup of euro zone finance ministers, and former European Central Bank head Jean-Claude Trichet.
The plan upset female MEPs, prompting European Parliament President Martin Schulz to pressure organizers to drop him.
French MEP Sandrine Belier said that given the circumstances it would have been "uncomfortable" to have Strauss-Kahn appear.
Earlier in March he had to be bundled into the back of a police car after addressing an event at Britain's Cambridge University to escape a protest by women's' rights activists.
In February, Strauss-Kahn was held in custody in Lille for two days for initial questioning in the case. Another of his attorneys, Henri Leclerci, told French radio in December it was not always easy to spot prostitutes when they are undressed.
On Wednesday, lawyers for Strauss-Kahn and the hotel maid accuser, Nafissatou Diallo, will wrangle over whether his former IMF position grants him diplomatic immunity from the civil suit.
Neither Strauss-Kahn nor Diallo are due to appear in court. ($1 = 0.7504 euros)
(Additional reporting by Gerard Bon and Robin Emmott in Brussels; Writing by Alexandria Sage and Catherine Bremer; Editing by Maria Golovnina)