IMF chief denies misconduct after affair

Allegations that Dominique Strauss-Kahn, head of the International Monetary Fund (IMF), misused his power after a brief sexual affair with a senior woman employee were dismissed by friends yesterday as politically motivated.

Friends and colleagues of the former French finance minister said that the leaking of the investigation to the Wall Street Journal on Saturday was intended to "destabilise" M. Strauss-Kahn in the midst of the global financial crisis. They said that the IMF chief had been under investigation for three months. News of the inquiry had reached the press just before the findings of the internal inquiry were expected this week.

"The report is about to come out and will completely clear him," a friend of M. Strauss-Kahn told the French newspaper Le Journal du Dimanche yesterday. "Someone wanted to create a media scandal because they knew that, politically, this was going nowhere."

The Journal du Dimanche has close links with M. Strauss-Kahn, 59. His wife, Anne Sinclair, a French television journalist, is writing a weekly US campaign diary for the newspaper. Her diary appeared yesterday on page nine of the newspaper. Coverage of the allegations against the IMF chief dominated pages one, two and three.M. Strauss-Kahn, known in France as DSK, admitted on Saturday having a brief affair with a senior IMF economist, Piroska Nagy, during the Davos world economic summit in Switzerland in January. Ms Nagy was later given a generous redundancy package from the IMF and moved to the European Bank of Reconstruction and Development in London.

The IMF is holding an internal investigation to decide whetherM. Strauss-Kahn abused his position to force Ms Nagy out or whether, alternatively, he helped her to receive an over-generous severance package. Her lawyers issued a statement at the weekend denying both suggestions.

Colleagues of M. Strauss-Kahn in the French Socialist party suggested he was the victim of a political plot because he had taken a forthright line on the global credit crisis. M. Strauss-Kahn, who failed to win the Socialist party nomination for the 2007 presidential election, is regarded as a possible contender in 2012.

President Nicolas Sarkozy was said to have been deeply irritated to find M. Strauss-Kahn's name on the front of the Wall Street Journal on Saturday when he arrived in the US for an economic summit with President George Bush. It was M. Sarkozy who strongly pushed his name as the "European" candidate to head the IMF last year, despite reservations in London and several other EU capitals.

Just before the appointment was confirmed, a senior French journalist warned that "DSK" might be a liability at the IMF because of his reputation as an "insistent" womaniser. The Brussels correspondent of the newspaper, Libération, Jean Quatremer, wrote: "The only real problem with Strauss-Kahn is his attitude to women. Too insistent ...he often borders on harassment.

"The IMF is an international institution with Anglo-Saxon morals. One inappropriate gesture, one unfortunate comment, and there will be a media hue and cry."