DSK and the IMF's Culture of Corruption

From the Wall Street Journal ...

The IMF was well aware of Dominique Strauss-Kahn's (DSK) treated the IMF female staff is his personal harem.

"Despite my long professional life, I was unprepared for the advances of the managing director of the IMF," wrote Piroska Nagy, an IMF staff economist whom Mr. Strauss-Kahn pursued until she agreed to a brief affair in 2008. "I did not know how to handle this," she added in a letter to a law firm investigating the affair. "I felt, 'I was damned if I did and damned if I didn't.'"

This letter apparently did not influence the board of the IMF which gave DSK a clean bill of health in 2008.

Ms. Nagy's letter—which added that Mr. Strauss-Kahn was "a man with a problem that may make him ill-equipped to lead an institution where women work under his command"—has received considerable media attention in recent weeks, and rightly so. But perhaps its real interest lies in the way none of Ms. Nagy's points seem to have found their way into the firm's October 2008 report to the IMF Executive Board.

On the contrary, the report, conducted by three lawyers at the firm of Morgan, Lewis & Bockius, concluded that "there is no evidence that the MD [managing director], either expressly or implicitly, threatened the female staff member in any way to induce her to engage in the affair or to keep it confidential." The IMF board gave Mr. Strauss-Kahn merely a wrist slap for a "serious error of judgment," along with board assurances that the episode would "in no way affect the effectiveness of the Managing Director in the very challenging and difficult period ahead."

And that famous watchdog press? Nothing to see folks, move along.

Compare that to the treatment that Paul Wolfowitz got.

Remember that Mr. Wolfowitz's alleged sin was that he had arranged a job transfer, along with a substantial raise, for his companion Shaha Riza, a bank employee at the time Mr. Wolfowitz took the helm in 2005.

But any suggestion that favoritism had been involved quickly fell apart when it came to light that Mr. Wolfowitz had disclosed the relationship with the bank's board before taking the job; that he had sought to recuse himself from the matter; that the bank's ethics committee had forbidden him from recusing himself; and that the committee had also directed him to arrange a promotion and pay raise for Ms. Riza "on the basis of her qualifying record" and out of concern for the "potential disruption" to her career for a conflict of interest that was not of her own making.

So let's see, Wolfowitz was told by the board of the IMF to promote his girlfriend and give her a raise, for which he was smeared in the press and forced to resign.

The problem appears to be with the IMF itself.

...his sexual pursuit of underlings forgiven, Mr. Strauss-Kahn was treated in the media as a hero for pushing vast sums on bankrupt economies like Greece. Even now, with the bailouts failing and their mastermind on bail, he is seen as a visionary brought low by his fatal flaw.

Yet what ought to be clear is that the reason Mr. Strauss-Kahn was so popular within the IMF (female company excepted) was that his own behavior was so in tune with the ethos of the institution. Here is a place where power can be exercised without electoral accountability, privileges can be enjoyed without scrutiny, salaries can be claimed without taxes, and other people's money can be spent with abandon.

The IMF is not the only international organization that is a law unto itself, that rewards its employees handsomely with tax free pay and perks, and that appears to be unaccountable to anyone. The UN is such an organization. The size of these rogue institutions has metastasized since the 1950s and it's time to send some of them riding into the sunset.

UPDATE:  More is being released from the letter that Piroska Nagy wrote.  Here's an interesting tidbit: 

“I believe that Mr. Strauss-Kahn abused his position in the manner in which he got to me."


“I provided you the details of how he summoned me on several occasions and came to make inappropriate suggestions to... I did not know how to handle this; as I told you I felt that I was ‘damned if I did and damned if I didn’t.’"


"[DSK is a] brilliant leader with a vision for addressing the ongoing global financial crisis. He is also an aggressive if charming man..."

Despite being treated as a part of DSK's harem, a disposable peace of meat, she calls her seducer brilliant and charming. She's a perfect member of the IMF.