Saturday, 18 October 2008 IMF SCANDAL IMF Investigates Strauss-Kahn Over Affair IMF Managing Director Dominique Strauss- Kahn is being probed for alleged sexual relationship with a subordinate. (Reuters) The International Monetary Fund is investigating its boss, Dominique Strauss-Kahn, to see whether he abused his position in connection with a sexual relationship with a subordinate, the Wall Street Journal said on Saturday. Several countries have turned to the IMF for finance to help ease the effects of a global financial crisis. The paper said the IMF had hired the law firm Morgan, Lewis & Bockius LLP in late August, to carry out the investigation which is expected to be completed by the end of the month. The probe was sought by A. Shakour Shalaan, who represents Egypt and other Arab countries on the IMF board with the advice of the U.S. and Russian representatives, the paper said. "There was an allegation concerning improper behaviour of a personal nature on the part of the managing director," it quoted IMF chief spokesman Masood Ahmed as saying. "All allegations, particularly relating to senior management, need to be investigated." In a statement, Strauss-Kahn said, "I have cooperated and am continuing to cooperate with outside counsel to the Fund concerning this matter." He said the "incident which occurred in my private life" took place in January 2008. "At no time did I abuse my position as the Fund's managing director." Strauss-Kahn is a former French finance minister who made an unsuccessful attempt to be the candidate for his Socialist party in the 2007 presidential elections. He is a respected economist and his appointment to head up the IMF in September 2007 was backed by President Nicolas Sarkozy who will be in Washington this weekend to discuss the financial crisis with U.S. President George W. Bush. The investigation follows the resignation in June 2007 of World Bank President Paul Wolfowitz. He stepped down under pressure following an ethics scandal over a promotion and pay rise for his long-term companion who worked at the institution. The newspaper said the relationship was provoking criticism within the IMF because not all 24 members of the board were aware of the investigation until Friday. Internal critics said members who had knowledge of the allegations may have been able to use that information in policy and funding disputes with Strauss-Kahn, the paper said. The paper said the probe concerned Strauss-Kahn's relationship with Piroska Nagy, who at the time was a senior official in the IMF's Africa department. She resigned in August as the IMF reduced the size of its work force and now works at the European Bank for Reconstruction and Development. The investigation is looking at whether Nagy, who is married to Argentine-born economist Mario Blejer, got a larger severance package than would otherwise have been expected. (Reuters)   Articles Blogs Conversations Placements Events