I.M.F. Begins Inquiry Into Chief’s Relationship With Employee
The I.M.F. hired a law firm in August to conduct the investigation, which is taking place just as the global financial crisis threatens to swamp smaller and poorer nations for whom the I.M.F. provides crucial support. The investigation was first reported by The Wall Street Journal.
“This is a very bad time for a leadership distraction,” said Simon Johnson, a former chief economist at the I.M.F. “I think the global crisis is just beginning, and I think it’s going to get much worse before it gets better.”
In a written statement, Mr. Strauss-Kahn said he had done nothing wrong. “With my full support, the I.M.F. is examining an incident which occurred in my private life in January 2008.” He wrote that he was cooperating with the inquiry but that “at no time did I abuse my position as the fund’s managing director.”
Over the summer, the allegations came to the attention of A. Shakour Shaalan, an Egyptian who is the longest-serving member of the board and who represents much of the Middle East. Mr. Shaalan asked for an independent investigation.
The law firm is expected to report its findings to the agency’s executive board by the end of the month, said William Murray, an I.M.F. spokesman.
The inquiry concerns Mr. Strauss-Kahn’s relationship with Piroska Nagy, who was a senior official in the I.M.F.’s Africa Department. Ms. Nagy left the fund in August as part of a buyout of nearly 600 employees instituted by Mr. Strauss-Kahn to cut costs. She now works at the European Bank for Reconstruction and Development.
According to a senior official familiar with the board’s thinking, the investigation is looking into how Ms. Nagy was chosen for the buyout, if she was paid more than she was entitled to as a senior official in the Africa Department and if she was allowed to take the buyout outside of normal channels. The official spoke on condition of anonymity because he was discussing an internal personnel matter.
Robert S. Litt, Ms. Nagy’s lawyer, said she left voluntarily with “a severance package that was generally available, and the terms were the same as were available to others of her grade and seniority.” He added: “She received no special treatment of any kind, either favorable or unfavorable, and she was not pressured to leave.”
Mr. Strauss-Kahn is a former French finance minister who ran for president in 2007. He was appointed the I.M.F.’s managing director a year ago.
The inquiry recalls a scandal 15 months ago when Paul D. Wolfowitz resigned as World Bank president after investigators found that he had arranged a generous pay and promotion package for a companion.
Mr. Wolfowitz’s ouster was fueled not only by his decisions about his companion but also by a visceral dislike many at the agency felt for a major backer of the Iraq war. By contrast, Mr. Strauss-Kahn is generally liked and respected at the agency.