The former head of the International Monetary Fund, Dominique Strauss-Kahn, is once again embroiled in a sex scandal -- this time over allegations he took part in a high-priced hotel prostitution ring.

Strauss-Kahn was taken into police custody in Lille, France for questioning on Tuesday.

"They have 48 hours to hold Dominique Strauss-Kahn and in that time they will be interrogating him and at the end of it we'll find out whether charges will be laid," CTV's London Bureau Chief Tom Kennedy said in an interview.

Rumours have been circulating for months that Strauss-Kahn was involved in the prostitution ring in France and Belgium that allegedly included high-level business people and even a police chief, Kennedy told CTV News Channel.

Police have been probing the allegations for several months, questioning prostitutes who claim they had sex with Strauss-Kahn in 2010 and 2011 in Paris and Washington D.C.

"The name of Dominik Strauss-Kahn kept coming up as an individual who was involved in these very expensive, high-priced sex parties and now police are finally getting a chance to question him," Kennedy said.

Investigators are trying to determine whether the prostitutes were paid using corporate funds from a French construction company.

It is not illegal to pay for sex in France. However, it is illegal to organize prostitution rings or to use corporate funds to pay for it.

Strauss-Kahn's defence team has not denied he was involved in the sex parties, but say he had no idea the women at the orgies were hired prostitutes.

"He could easily not have known, because as you can imagine, at these kinds of parties you're not always dressed, and I challenge you to distinguish a naked prostitute from any other naked woman," lawyer Henri Leclerc told French radio Europe 1 in December.

Kennedy said Strauss-Kahn's lawyers have essentially acknowledged his participation in the orgies, but maintain he is innocent of any criminal activity.

He said the man once seen as a likely future French president is now being openly mocked in France, where he has been earned the nickname, "hot rabbit."

Strauss-Kahn, who is married, lost his high-profile job at the IMF last year after a New York City hotel maid accused him of forcing her to perform oral sex.

While Strauss-Kahn has admitted the encounter was "inappropriate," he said it was not violent.

Strauss-Kahn was charged over the incident, but prosecutors eventually dropped the case against him after the alleged victim was found to have lied about her background, as well as changing her account of what she did immediately after the attack.

The woman has now filed a lawsuit against Strauss-Kahn. In the wake of that scandal, a young French writer accused Strauss-Kahn of attempted rape, but prosecutors refused to pursue the allegations.