Nicolas Sarkozy investigated over alleged Libya funding

Nicolas Sarkozy has been under investigation since losing immunity from prosecution when he was defeated in the presidential election last year

French prosecutors are investigating allegations that Libya helped fund Nicolas Sarkozy's successful 2007 presidential election bid.

The inquiry would look at charges of "active and passive corruption", "influence peddling" and other issues, a judicial source told AFP news agency.

The former president was placed under formal investigation last month over claims he received illegal donations from France's richest woman.

Mr Sarkozy denied all the allegations.

He has previously hinted that he might consider another run for the presidency in 2017, but the outcome of these investigations could determine whether he will make a return to politics, observers say.

'Abundant' financing

It was during Nato-led air strikes on Libya in 2011 that Saif al-Islam, son of the then leader Muammar Gaddafi, first accused Mr Sarkozy of taking millions of his father's money for campaign funding.

The claims were supported in December by Lebanese businessman Ziad Takieddine, who has long acted as a middleman between France and the Middle East.

He has told judges that he has written proof that Mr Sarkozy's campaign bid was "abundantly" financed by Tripoli, and that the 50m euros (£43m) worth of payments continued after he became president.

Muammar Gaddafi was a guest in Paris in 2007 and afforded every courtesy, even pitching his tent close to the Elysee Palace, the BBC's Christian Fraser reports.

But Mr Sarkozy has always denied any wrongdoing, pointing out that he was the chief advocate of the Nato-led campaign that removed Col Gaddafi from power, he adds.

Mr Sarkozy has also vehemently denied taking financial advantage of 90-year-old L'Oreal heiress Liliane Bettencourt, with whom he forged a close friendship while mayor of the wealthiest suburb in Paris.

It is alleged that staff acting for Mrs Bettencourt gave 150,000 euros (£120,600) in cash to Mr Sarkozy's aides during his successful 2007 campaign to become president. Mrs Bettancourt also denies the allegations.

Police raided Mr Sarkozy's home and offices last July after he lost his presidential immunity following his election defeat to Francois Hollande earlier in the year.