'IMF chief being probed over alleged affair with subordinate'

Washington, Oct 18 (PTI) International Monitory Fund's
(I.M.F.) French-born chief Dominique Strauss-Kahn is under
investigation over whether he abused his position by engaging
in sexual relationship with a married subordinate, a media
report said Saturday.

The International Monetary Fund has retained the law firm
of Morgan, Lewis and Bockius L.L.P. to conduct the
investigation, which is expected to be completed by the end of
the month, 'The Wall Street Journal' reported.

"There was an allegation concerning improper behaviour of
a personal nature on the part of the Managing Director
(Strauss-Kahn)," Masood Ahmed, the I.M.F.'s chief spokesman,
was quoted as saying. "All allegations, particularly relating
to senior management, need to be investigated."

The investigation, the paper said, focusses on 59-year-old
Strauss-Kahn's relationship with Hungarian-raised Piroska
Nagy, a former senior official in the I.M.F.'s Africa
department.

Citing unnamed individuals familiar with the issue, the
Journal claimed Strauss-Kahn, the former French Finance
Minister, and Nagy exchanged e-mails about a possible intimate
relationship, which is said to have started early this year
during a conference in Europe.

The relationship apparently ended after Nagy's husband
Mario Blejer, a prominent Argentine-born economist who has
worked at the I.M.F., discovered the e-mails.

The paper quoted Strauss-Kahn said as saying in a
statement that he had cooperated and was continuing to
cooperate with outside counsel to the I.M.F. concerning the
matter.

Strauss-Kahn, who was elected I.M.F. Managing Director in
September 2007, said the "incident which occurred in my
private life" took place in January 2008, the paper reported.

"At no time did I abuse my position as the Fund's
Managing Director," he was quoted as saying.

The report said one issue for investigators is whether
Strauss-Kahn showed favouritism to Nagy at the I.M.F. or
sought retribution. They are also probing whether Nagy's
severance package was outsized for a person of her position
and tenure.

They are also investigating allegations that Strauss-Kahn
had showed favouritism to another female employee, it said.

Nagy resigned from the I.M.F. in August as the Fund was
reducing the size of its work force by nearly 600 slots. She
is now working as an economist at the European Bank for
Reconstruction and Development in London.

The probe comes 15 months after the President of the
World Bank, Paul Wolfowitz, was forced to resign in the wake
of alleged favouritism to a junior employee of the institution
with whom he had a long-standing relationship.

Robert Litt Nagy's lawyer, said his client "doesn't
comment on her personal life." She received "no special
treatment of any kind, either favourable or unfavourable," he
was quoted as saying.

Litt said she was not pressured to leave the I.M.F. and
took a buyout package that was available to others of her pay
grade and seniority, according to the Journal.

The probe is sought by the longest-serving member of the
I.M.F.'s governing board A Shakour Shaalan, who represents
Egypt and other Arab countries, with advice from the
representatives of Russia and the U.S., the report said.

It comes at a time when I.M.F. is attempting to focus on
helping developing countries withstand the global financial
crisis.