French police detained Dominique Strauss-Kahn for questioning over allegations he took part in orgies in Paris and Washington paid for by a couple of businessmen.
The 62-year-old former International Monetary Fund chief, who until last year was seen as the front-runner to replace Nicolas Sarkozy as French president, had been due to face questioning as a witness, but prosecutors say he is now a suspect.
He arrived at a police station in the northern city of Lille just before his early-morning appointment for what could be up to 48 hours of questioning about his role in the latest sex scandal.
Shortly after his arrival, prosecutors said he would instead be questioned on suspicion of "pimping and misuse of company funds," and was thus not free to leave, and could face charges and see his questioning stretch to 96 hours.
Afterwards, if a judge agrees, he could be remanded in custody.
Investigating magistrates want to know whether he was aware that the women who entertained him at parties in restaurants, hotels and swingers' clubs in Paris, Washington and several European capitals were paid prostitutes.
They will also seek to determine whether he knew that the escorts were paid for with funds fraudulently obtained by his hosts from a French public works company, for which one of them worked as a senior executive.
Paying a prostitute is not in itself illegal in France, but profiting from vice or embezzling company funds to pay for sex can lead to charges.
Strauss-Kahn admits he has led an adventurous sexual life, but denies that he was implicated in pimping or corruption, and has indicated he will deny any criminal wrongdoing.
Two northern businessmen, Fabrice Paszkowski a medical equipment tycoon with ties to Strauss-Kahn's Socialist Party, and David Roquet, former director of a local subsidiary of building giant BTP Eiffage, have been charged.
The pair has alleged links to a network of French and Belgian prostitutes centered on the Carlton Hotel in Lille, a well-known meeting place of the local business and political elite.