Probe clears IMF chief Strauss-Kahn in affair
WASHINGTON (Reuters) - The International Monetary Fund's board on Saturday cleared Managing Director Dominique Strauss-Kahn of harassment, favoritism and abuse of power following an inquiry into his affair with an IMF economist.
While the board stopped short of disciplinary action, its leader, Shakour Shaalan, acknowledged there was concern among female staff about Strauss-Kahn's behavior.
Shaalan said he personally warned Strauss-Kahn, a former French finance minister, against further improper conduct. He said the board had accepted Strauss-Kahn's apology.
"The executive board noted that the incident was regrettable and reflected a serious error of judgment on the part of the managing director," the IMF board, which represents the fund's 185 member countries, said in a statement.
"The personal conduct of the managing director sets an important tone for the institution and, as such, must be beyond reproach at all times," it added.
The investigation by an outside lawyer retained by the IMF board found Strauss-Kahn conducted a brief, consensual affair in January 2008 with Piroska Nagy, who worked in the IMF's Africa department as a senior economist until she took a staff buyout in August.
The inquiry began after a complaint by a third person.
The IMF board sought to deal with the investigation quickly so as not to distract the IMF from its role in dealing with the global financial crisis that has sent markets plunging on fears that the world economy is in for a long and deep recession.
Several emerging market economies have sought IMF advice and financing in recent weeks to help them through the crisis.
In a statement, Strauss-Kahn repeated an earlier apology to the board, blaming his actions on a serious error of judgment.
"I very much regret the incident and I accept responsibility for it," said Strauss-Kahn whose wife, French television personality Anne Sinclair, dismissed it as a "one night stand" in a statement on her blog.
Shaalan told reporters that Strauss-Kahn retained the confidence of the board.
"Our conclusion was that this will in no way affect the effectiveness of the managing director in the very challenging and difficult period ahead," said Shaalan, who represents Egypt and other Arab countries on the board.
DID NOT OFFER TO QUIT
Shaalan said Strauss-Kahn was never asked to resign, nor did he offer to.
"There is little doubt in my mind that while there is some confidence that may have been lost, he will regain it very soon," he added.
In the findings from the investigation, made available to the media, the law firm Morgan, Lewis & Bockius said there was no sign that Strauss-Kahn coerced Nagy into the affair or gave her preferential treatment.
It also said there was no evidence that he pressured her into leaving the Washington-based institution and noted that her decision to leave "was hers and hers alone."
The report said the investigation did not find any evidence to support other allegations of improper conduct.
IMF spokesman Masood Ahmed said the board's findings and its acceptance of Strauss-Kahn's apology meant the matter was now considered closed.
(Reporting by Lesley Wroughton; Editing by Peter Cooney)
