Ex-French president Nicolas Sarkozy has been placed under formal investigation for "abuse of weakness" in a 2007 party funding case involving elderly L'Oréal heiress Liliane Bettencourt, the public prosecutor said on Thursday.
Under French law, a formal investigation is the final step before a suspect is accused of a crime. Sarkozy, who only this month hinted he could make a political comeback, has repeatedly denied taking campaign funds from Bettencourt.
"Nicolas Sarkozy, who benefits from the presumption of innocence, had been notified that he has been placed under formal investigation for taking advantage of a vulnerable person in February 2007 and during 2007 to the detriment of Liliane Bettencourt," the prosecutor in Bordeaux said in a statement after a hearing.
The 90-year-old Bettencourt is France's richest woman. Sarkozy, who lost last year's election to Socialist François Hollande, faced members of her staff at the hearing earlier on Thursday.
French TV channel BFM quoted Sarkozy's lawyer, Thierry Herzog, as saying that the decision was "incoherent and unjust" and that he would appeal.
If found guilty, the 57-year-old Sarkozy faces a maximum three-year jail sentence and a hefty fine. But the damage to his political career could be irreversible. He gave the strongest hint yet that he might make a comeback bid by telling a magazine that a sense of duty to fix the economy might oblige him to run in 2017.
The news of the investigation will provide some respite for Hollande, who is being battered in the polls for his handling of the economy and was embarrassed this week when budget minister Jerome Cahuzac was forced to resign over a tax fraud inquiry.
Sarkozy's former industry minister, Christian Estrosi, said there was a "political stench" to the decision to place Sarkozy under formal investigation. "Everybody will notice that this happened 48 hours after a Socialist minister was called into question, probably to compensate for that," Estrosi said in a statement.
Sarkozy was questioned in November by judges, but they opted not to open a full-blown inquiry. Initial suspicions over funding were fuelled three years ago when a woman who worked as an accountant for the mentally frail Bettencourt alleged that a large cash withdrawal was earmarked for Sarkozy's presidential election campaign. He had immunity from prosecution while he was president.
Bettencourt was declared to be suffering from dementia in 2006 and was placed under the guardianship of her family in 2011.
The Bettencourt affair is not the only cloud on the horizon.
Lawyers also are demanding that Sarkozy explain himself in two other cases. One is about the terms of a submarine sale to Pakistan, and another concerns lavish spending on opinion polls by his office when he was president.
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