Sex charge probe fuels IMF crisis

The International Monetary Fund (IMF) has been plunged into a leadership crisis at the height of world financial turmoil by allegations that its managing director had an affair with a married employee.

The IMF has begun an investigation into whether Dominique Strauss-Kahn, the former French Socialist finance minister, acted improperly by showing favouritism to Piroska Nagy, a Hungarian official in the fund’s Africa department.

Investigators are also examining a pay-off received by Nagy when she resigned in August before taking a job with the European Bank for Reconstruction and Development in London.Robert Litt, her lawyer, denied that she had received “special treatment”.

The affair is reported to have come to light when Nagy’s husband Mario Blejer, an Argentine-born economist who once worked at the Bank of England, discovered compromising emails.

Strauss-Kahn, 59, who is married to Anne Sinclair, one of France’s most popular television presenters, said in a statement on Saturday that he was “continuing to cooperate” with the investigation into what he described as an “incident which occurred in my private life”. He added: “At no time did I abuse my position as the fund’s managing director.”