Disgraced former IMF chief Dominique Strauss-Kahn, who partly ran an investment company that is being sued for alleged fraud, will file a suit next week for defamation, his lawyer Jean Veil told AFP on Saturday.

The investigation was opened on July 28 after a former shareholder in a now-defunct Luxembourg-based firm, LSK, lodged a formal complaint.

Strauss-Kahn, once tipped as a future French president, was forced to resign from his role as head of the IMF in 2011 after being accused of sexual assault by a New York hotel maid.

Those criminal charges were dropped in 2012 and the case was settled in a civil suit.

He was also dragged through French courts earlier this year, accused of being at the centre of a prostitution ring, but was found not guilty.

The probe into Strauss-Kahn's business dealings in Luxembourg focuses on a former shareholder, Jean-Francois Ott, who pumped 500,000 euros ($570,000) into the company.

Ott claims he was given a misleading impression of the firm's financial situation when he made the cash injection and has sued the company, and some of its former administrators, including Strauss-Kahn, for fraud.

Strauss-Kahn had hoped to build up LSK into a $2.0-billion-dollar investment fund, but winding-up proceedings began in November 2014 after its founder, Thierry Leyne, committed suicide in Tel Aviv.

Veil said his client had actually been duped by Leyne. Strauss-Kahn quit the firm just days before Leyne's death and accused his former associate of "excessive borrowing."

Source: AFP