Dominique Strauss-Kahn on formal sex ring investigation

Mr Strauss-Kahn's questioning in Lille on Monday came as a surprise

Former International Monetary Fund boss Dominique Strauss-Kahn has been placed under formal investigation in France over alleged involvement in a prostitution ring.

The move could lead to formal charges.

He has admitted attending parties where the authorities believe prostitutes were provided by a gang, but denies knowing that they were prostitutes.

Last May, he resigned from the IMF after being accused of attempting to rape a hotel maid in New York.

The charges were later dropped.

The maid, 32, is now bringing a civil case against Mr Strauss-Kahn, which is due to start in New York on Wednesday. He has always denied any wrongdoing.

'No inkling'

Mr Strauss-Kahn faces preliminary charges of procuring prostitutes and involvement in an "organised gang", one of his lawyers said.

The 62-year-old former IMF head, who could face up to 20 years in prison if tried and convicted, was released on 100,000 euros ($135,000) bail.

Prosecutors say Mr Strauss-Kahn cannot contact defendants, plaintiffs, witnesses or the media in relation to the case.

The BBC's Christian Fraser in Paris says the allegations relate to his supposed involvement in a vice ring that hired prostitutes for hotel orgies, mainly in Lille, but also in Paris and Washington.

The case has become known in France as the "Carlton affair", named after a hotel where several orgies are said to have been held.

The magistrates are examining allegations that business associates of Mr Strauss-Kahn were involved in the prostitution ring, and misusing corporate funds.

Eight people have already been placed under formal investigation, including a senior police officer.

Nafissatou Diallo is bringing a civil case in New York

One of Mr Strauss-Kahn's lawyers, Richard Malka, said: "He firmly declares that he is not guilty of these acts and never had the least inkling that the women he met could have been prostitutes."

Consorting with prostitutes is not against the law in France, and Mr Strauss-Kahn has acknowledged that he was at some of the parties with the women.

Last month he was held in police custody for 48 hours at the start of his formal questioning.

Our correspondent says Monday's hearing came as a surprise, and it is not yet clear why Mr Strauss-Kahn appeared before his scheduled appointment later in the week.

However, Mr Strauss-Kahn is also facing the court case in New York.

He will not appear in person there.

His lawyers, and those of the maid, Nafissatou Diallo, will debate whether Mr Strauss-Kahn's position in the IMF afforded him diplomatic immunity.

The criminal charges against Mr Strauss-Kahn were earlier dropped, when doubts emerged over the reliability of Ms Diallo's testimony.

Mr Strauss-Kahn had faced a third case - an accusation by 32-year-old author Tristane Banon of attempted rape.

Although magistrates concluded there was prima facie evidence of sexual assault, the statute of limitations precluded a prosecution and the case was dropped.