IMF chief under probe over affair

Paris: The International Monetary Fund has launched an investigation of its managing director, the Frenchman Dominique Strauss-Kahn, for abuse of power while involved in a relationship with a subordinate, a spokesperson said on Saturday.

The probe was set in motion at the initiative of a long-serving member of the IMF's governing board, Shakour Shaalan of Egypt, and of representatives of other Arab states "who had heard of certain allegations" of impropriety, the IMF's William Murray said.

The IMF is under the spotlight as several countries have turned to it for finance to help ease the effects of a global financial crisis and politicians consider the fund's role in preventing future crises.

The Wall Street Journal said the IMF had hired the law firm Morgan, Lewis & Bockius LLP in late August to carry out the probe which is expected to be completed by the end of October.

In a statement, Strauss-Kahn, a respected economist, said: "I have cooperated and am continuing to cooperate with outside counsel to the Fund concerning this matter."

He said the "incident which occurred in my private life" took place in January 2008. "At no time did I abuse my position as the Fund's managing director."

Internal critics said members who had knowledge of the allegations may have been able to use that information in policy and funding disputes with Strauss-Kahn, the paper said.

It said the probe concerned Strauss-Kahn's relationship with Piroska Nagy, who at the time was a senior official in the IMF's Africa department. She quit in August as the IMF reduced the size of its work force and now works at the European Bank for Reconstruction and Development.