IMF chief Strauss-Kahn apologizes for affair

WASHINGTON (Reuters) - The head of the International Monetary Fund, Dominique Strauss-Kahn, on Monday publicly apologized for “an error of judgment” in an affair with a subordinate but denied he had abused his position.

International Monetary Fund Managing Director Dominique Strauss-Kahn speaks at the closing session of the annual International Monetary Fund-World Bank meeting in Washington, in this October 13, 2008 file photo. The IMF said on October 18, 2008 it was investigating whether Strauss-Kahn abused his power in an affair with a subordinate who has since left the global institution. REUTERS/Yuri Gripas/Files

In a memo e-mailed to staff after meeting with the fund’s board, Strauss-Kahn apologized to IMF employees, the woman he had the affair with, Piroska Nagy, and his wife for the trouble it has caused.

IMF officials dismissed speculation that he had resigned and said Strauss-Kahn had not quit.

The scandal comes as the IMF is dealing with the worst financial crisis since the 1930s and emerging economists turn to it for advice and financing.

It also follows the resignation of World Bank President Paul Wolfowitz, who was forced to resign 16 months ago amid a staff uproar over a high-paying promotion he authorized for his companion who worked at the bank.

The IMF board of 24 member countries has ordered an investigation by an outside law firm into whether Strauss-Kahn gave senior economist Nagy preferential treatment before she took a general staff buyout offer in August.

She is now working for the European Bank for Reconstruction and Development in London.

“I apologized and said that I very much regret this incident,” Strauss-Kahn said in the staff e-mail.

“Second, 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: “Third, I fully support the process that is underway and I will, of course, follow the board’s guidance as to how best to resolve this matter.”

Strauss-Kahn, a former French finance minister, said the result of the investigation was expected by the end of the month and urged the IMF board to inform staff of the outcome as soon as possible.

“I want to apologize to the staff member concerned for my error in initiating this relationship,” Strauss-Kahn said. “She is a talented economist and consummate professional. I acknowledge and regret the difficult situation this has created for her. I also apologize to my wife and family,” he added.

He told the IMF staff to focus on their work during the critical days of the financial crisis and not to be distracted by rumors.

“I am committed to doing what is right for the institution and it is my fervent wish that this matter be resolved as quickly as possible,” he said.

Strauss-Kahn’s wife, a high profile French television interviewer, Anne Sinclair, said on her blog on Sunday she did not want to talk about her private life but wanted to put an end to malicious rumors.

“For my part, this one night stand is now behind us; we have turned the page,” she said.

Nagy’s husband, Mario Blejer, a well-known international economist and former Argentine central bank governor and an advisor to the Bank of England, said he and Nagy had been separated for several years.

“I wanted to say explicitly that I was separated from her for several years. While she was working in Washington at the fund, I was at the Bank of England,” an Argentine news agency quoted him telling local radio.

Reporting by Lesley Wroughton, Editing by Sandra Maler