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IMF chief to remain in office following scandal

IMF head Dominique Strauss-Kahn kept his job on Saturday after an investigation into his affair with an IMF economist, but was scolded by fund directors for “a serious error of judgment.”

Based on an independent external inquiry, the IMF executive board said it had “concluded that there was no harassment, favoritism, or any other abuse of authority by the managing director. “Nevertheless, the executive board noted that the incident was regrettable and reflected a serious error of judgment,” it said in a statement.

In a teleconference with the media, IMF executive director Shakour Shaalan said the board had unanimously accepted Strauss-Kahn’s apologies and that it would continue to work with him.

“The mood of the board was very, very positive,” he said after it met on Saturday. “Our conclusion was that this in no way affects the effectiveness of the managing director. The managing director is very competent in carrying out his job. This was an unfortunate incident; the board has accepted his apologies.”

Shaalan acknowledged that many in the IMF staff, especially women, “are not at all happy” with Strauss-Kahn’s behavior.

“The managing director has expressed his regrets; I don’t think that we can ask him to do more at this time,” he said. “We will continue to work with him. If there is some confidence that has been lost, he will regain it very soon.”

Strauss-Kahn, 59, considered one of the preeminent European political figures on economic matters, was appointed in September last year to head the IMF and help reform the institution.

The French former political star admitted earlier he had an extramarital affair with Hungarian-born economist Piroska Nagy, but denied he had harassed her and rejected suggestions she was given a more generous severance package than merited when she left the IMF in August.

In a statement on Saturday Strauss-Kahn said he had apologized to the board, IMF staff and his family for his behavior.

“I agree with the statement made by the executive board today in concluding its inquiry,” he said. “I very much regret the incident and I accept responsibility for it.”

The outside inquiry into the affair, which involved 28 interviews including with the key people involved, found that he engaged in “a consensual physical relationship of short duration” with Nagy in January.
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