IMF probes MD in alleged affair

International Monetary Fund chief Dominique Strauss-Kahn is under investigation as to whether he abused his position by engaging in a sexual relationship with a subordinate, the Wall Street Journal reported.

There was an allegation concerning improper behaviour of a personal nature on the part of the managing director, the newspaper said, citing Masood Ahmed, the IMF’s director of external relations. Ahmed said all allegations, particularly relating to senior management, needed to be investigated, according to the WSJ.

The investigation focuses on Strauss-Kahn’s relationship with Piroska Nagy, wife of former Argentine central bank President Mario Blejer. Hungarian-raised Nagy was a senior official in the IMF’s Africa department at that time, the newspaper reported.

Strauss-Kahn began approaching Nagy about an affair in December 2007, the WSJ said, citing several individuals familiar with the matter. The two exchanged e-mails about a possible intimate relationship, which commenced early this year during a conference in Europe, the individuals were cited as saying.

In a statement, Strauss-Kahn said the incident took place in January, as part of his private life, and denied any abuse of his position, the WSJ reported.

Continuing to Cooperate: Strauss-Kahn has cooperated and is continuing to cooperate with the IMF’s outside counsel concerning the matter, the newspaper said, citing the statement.

The IMF has retained the firm of Morgan, Lewis & Bockius LLP to conduct the investigation, which is expected to be completed by the end of the month, the newspaper said.

The investigation comes 15 months after World Bank President Paul Wolfowitz quit less than halfway through his five-year term after the White House bowed to pressure for his ouster from European governments amid a furore over securing a pay raise for his companion.

The Wolfowitz controversy was sparked in April 2007 by staff complaints over his involvement in arranging a 36 per cent raise for companion Shaha Riza in 2005, shortly after he took over at the Washington-based lender.