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At IMF, vive la difference?

By Nicholas Kralev (Contact) | Wednesday, October 22, 2008

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International Monetary Fund chief Dominique Strauss-Kahn's reputation as a womanizer may have finally caught up with him, but economists and financial analysts expect the Frenchman to escape the fate of Paul Wolfowitz, who lost his job as head of the World Bank last year under similar circumstances.

Although Mr. Strauss-Kahn has admitted an affair with an employee, there is no evidence so far of favoritism, which Mr. Wolfowitz was found to have engaged in, though a report from an independent probe is not expected until later this month.

"We don't know all the facts, but on the surface of it, there are [some] differences," said Terry Miller, director of the Center for International Trade and Economics at the Heritage Foundation. "Unless something more came to light, I don't think he will resign. But I'll leave it to the member states to decide."

Mr. Wolfowitz was forced to step down after it was established that he had intervened to secure promotions for a female companion, Shaha Riza, which some employees considered unmerited. He was also found to have influenced severance payments for Ms. Riza when she left the bank.

So far, there have been no similar charges proven in Mr. Strauss-Kahn's case. But his monthlong affair with Hungarian economist Piroska Nagy last year was serious enough for the IMF board to hire the Washington firm Morgan, Lewis & Bockius LLP to carry out an investigation.

Mr. Strauss-Kahn has been cooperating, which was not the perception of Mr. Wolfowitz's behavior at the time of his probe, said Steven R. Weisman, who until recently covered the World Bank and the IMF for the New York Times.

"The impression in the Wolfowitz case was that he had been more involved in the arrangements" with Ms. Riza's severance package, and that "he didn't level with people about how that happened," said Mr. Weisman, who is now a public policy fellow at the Peterson Institute for International Economics.

At the time the scandal broke, there was widespread dissatisfaction with Mr. Wolfowitz's leadership at the bank and a perception that he was "taking the organization in a direction that most people there didn't approve," Mr. Weisman said.

There is no such sentiment against Mr. Strauss-Kahn, analysts said. They noted that his womanizing reputation long preceded his appointment last year and was no secret in France, where he was finance minister.

"If he broke the IMF's code of sexual conduct, he'd have to resign, but we don't know that," said Michael Mussa, senior fellow at the Peterson Institute.