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IMF chief “sorry” over affair

Paris: Director of the International Monetary Fund (IMF), Frenchman Dominique Strauss-Kahn (59) made a public apology on Monday, characterising his affair with a subordinate as “an error of judgment”.

There could, however, be more trouble brewing for Mr. Strauss Kahn. The Wall Street Journal which first broke the story of Mr. Strauss-Kahn’s relationship with a subordinate on Tuesday reported that the IMF chief, bypassing usual recruitment procedures, had also pushed for the hiring of a French intern.

Though there was no “direct interference” on the part of Mr. Strauss-Kahn in the recruitment process, the journal report said the Fund’s human resource department insisted on her recruitment despite the fact that she did not have the “right profile” for a research post.

The young intern’s family is reportedly on a friendly footing with the Strauss-Kahns. The Journal described the young intern, Emilie Byhet, as the IMF Director’s “political protégée” and said she had campaigned for him in his failed bid to win the Socialist Party’s presidential nomination in 2007.

There is no hint of sexual involvement in the new charges levelled against the IMF chief. In a memo E-mailed to staff after meeting with the Fund’s board, Mr. Strauss-Kahn apologised to IMF employees, the woman he had the affair with, Piroska Nagy, and his wife for the trouble it has caused. He however denied he had abused his power or position.

“I apologised and said that I very much regret this incident,” he said in the E-mail. “While this incident constituted an error of judgment on my part, for which I take full responsibility, I firmly believe that I have not abused my position,” he said, adding: “I fully support the process that is under way and I will, of course, follow the board’s guidance as to how best to resolve this matter.”

The scandal comes at a difficult time for the IMF when the world’s financial markets are experiencing their worst crisis since 1929.

The charges have elicited a sharp reaction from the French government. Foreign Minister Bernard Kouchner said he suspected those who leaked the affair of having “malicious intent”. He said: “The scandal comes at a bad time. I wonder why it has some at the precise moment when we need Dominique Strauss-Kahn.”

Ms. Nagy, who resigned last August, is now working for the European Bank for Reconstruction and Development. The IMF Executive Board has launched an enquiry to determine whether Mr. Strauss-Kahn intervened to grant her a generous severance package and if he pressured Ms. Nagy into leaving.

Mr. Strauss-Kahn’s wife, a high-profile French television interviewer, Anne Sinclair, described her husband’s affair as “a one night stand” saying in her blog that she wanted to put an end to malicious rumours. “For my part, this one night stand is now behind us; we have turned the page,” she said.

Mr. Strauss-Kahn’s affair was brought to the notice of the IMF Executive Board by Ms. Nagy’s estranged husband, Mario Blejer, a well-known international economist and former Argentine central bank governor who is also an advisor to the Bank of England.

He issued a statement saying he and Ms. Nagy had been separated for several years. These revelations could have serious repercussion on Mr. Strauss-Kahn’s career and political prospects.

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