The IMF at work and at play

Dominique Strauss-Kahn is a French Socialist politician who currently serves as managing director of the International Monetary Fund. Recently, it came to light that Strauss-Kahn had a sexual relationship with a married subordinate at the IMF. In addition, he recommended the woman for a position as an intern in the research department even though, as the Washington Post puts it, “her qualifications were allegedly below the usual standards.” There were also questions as to whether Strauss-Kahn abused his power in connection with the woman’s departure this summer to the European Bank for Reconstruction and Development under an IMF voluntary retirement plan.

The IMF board of directors has concluded that Strauss-Kahn did not abuse his power and has it announced that he will be retained as head of their institution. The board was conent to call the matter “a regrettable incident” and “a serious error of judgment on the part of the director general.”

It’s instructive to compare Strauss-Kahn’s case to that of Paul Wolfowitz at the World Bank. Wolfowitz did not have an extra marital affair. And in response to his romantic involvement with a World Bank employee, Wolfowitz did not attempt to help her career at his institution, as Strauss-Kahn did. Instead, he asked to be recused from any consideration of her employment situation. In the end, World Bank “ethicists” decided that, due to the relationship, Wolfowitz’s girlfirend should be transferred out of the Bank and that her compensation upon transfer should be set at the rate she would have received had she not been ousted. His recusal request having been denied, Wolfowitz simply signed off on this perfectly sensible decision.

Even though Wolfowitz’s conduct was beyond reproach; he was removed from his job. Strauss-Kahn plainly engaged in misconduct; yet he will stay on.

I don’t mean to suggest that Strauss-Kahn should have been removed. One can make the case that his misconduct was not serious enough to warrent a discharge. The problem is that the decision to retain Strauss-Kahn almost surely had nothing to do with the merits. Reading between the lines of the Post’s account, it seems clear that Strauss-Kahn kept his job because he is a man of the left, because the non-leftist govenment of France likes having a Frenchman in charge of the IMF, and because there was a sense that he might be replaced by someone “more in line with Bush administration thinking.”

This is essentially the same array of considerations that cost Wolfowitz his job.

Meanwhile, the world is in the throes of a massive financial crisis.

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