LILLE, France (Reuters) - Former IMF chief Dominique Strauss-Kahn was questioned by police yesterday over his dealings with an alleged prostitution ring that was run from the northern French city of Lille and organized sex parties in Paris, Brussels and Washington.

Strauss-Kahn, a former finance minister seen as a strong contender for France’s 2012 presidential election until a sexual assault case in New York last May brought his ambitions to an abrupt halt, was to remain in police custody overnight and could be held until tomorrow morning.

The investigation is focused on a prostitution ring that allegedly supplied clients of Lille’s luxury Carlton hotel. Police want to establish whether Strauss-Kahn knew that women at parties he attended in Paris and Washington were prostitutes.

He could be deemed free of suspicion, or may be placed under formal investigation for benefitting from misappropriated company funds if investigators conclude that he attended sex sessions with prostitutes that company executives used expense accounts to pay for.

Dominique Strauss-Kahn

Either way, he could face an uncomfortably timed release from custody tomorrow, with President Nicolas Sarkozy, who he once dreamed of ousting from power, due to arrive in Lille that day for a pre-planned election campaign visit.

Strauss-Kahn made no comment to a crush of reporters and photographers as he arrived by car for questioning early yesterday at Lille police station.

Strauss-Kahn, 62, quit his International Monetary Fund post after he was accused last May of trying to rape a New York chambermaid, although criminal charges were later dropped.

Linked later to the Lille affair, Strauss-Kahn asked to speak to police about the case.
Strauss-Kahn’s lawyer Henri Leclerc has said his client had no reason to think the women were prostitutes.
“People are not always clothed at these parties. I challenge you to tell the difference between a nude prostitute and a classy lady in the nude,” Leclerc told French radio in December.

Eight people, including two Lille businessmen close to Strauss-Kahn and a police commissioner, have been arrested in the case, and construction firm Eiffage fired an executive suspected of using company funds to hire sex workers.

Using prostitutes is not illegal in France, but Strauss-Kahn risks being charged if investigators decide he knowingly had sex with prostitutes paid for out of company funds.