David Matthews was taken into custody for questioning last Tuesday by investigators with France's Brigade for the Protection of Minors in a case dating from 1998-99, after a complaint was lodged in 2017, the source said.
According to Europe 1 radio, which first reported the charges, Matthews, now 74, was accused by a niece shortly before she legally became an adult.
His daughter-in-law Pippa Middleton married financier James Matthews last May, after shooting into the spotlight in 2011 following the wedding of her sister Kate to Prince William, the second-in-line to the throne.
According to a Daily Mail report at the time of Pippa's wedding, David Matthews was born in Rotherham, England, and began his career selling cars before becoming a professional auto racer.
The Daily Mail says Matthews owns the Eden Rock luxury resort on the Caribbean island of St Barths, and the Glen Affric Estate in Scotland.
(Except for the headline, this story has not been edited by NDTV staff and is published from a syndicated feed.)
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