IMF head taken into custody in NY over alleged sex assault

Global News - Strauss-Kahn was being questioned after a 32-year-old chambermaid complained that a naked Strauss-Kahn sexually attacked her in his Manhattan hotel room, the police said. The maid, who said she broke free, suffered minor injuries, police said.

The development creates immediate uncertainty for the Washington-based IMF, which has been playing an important role in keeping the global economy stable in the wake of the financial crisis.

It also promises to stir up politics in France, where Strauss-Kahn is widely believed to be considering challenging French president Nicolas Sarkozy in next year’s election. Polls have shown he has strong odds of defeating Sarkozy.

An IMF spokesman had no immediate comment.

About 10 minutes before Air France Flight 23 was to take off , officers with the Port Authority of New York and New Jersey boarded the plane and removed Strauss-Kahn, the authorities said. They did not handcuff him.

The officers were acting at the behest of the New York police and turned over the French national to the police shortly thereafter. He was not placed under arrest, the authorities said. The Associated press reported that a top police spokesman said that the Strauss-Kahn had been staying at the Sofitel near Times Square.

An economist and lawyer who has gained prominence while captaining the IMF through one of the world’s worst financial crises, Strauss-Kahn joined the organization in 2007 with the support of many European nations and the United States.

He had served as France’s finance minister and is the subject of intense speculation in France that he will declare his candidacy for president as a member of the Socialist Party. He unsuccessfully ran for his party’s nomination in the last election.

At the IMF, Strauss-Kahn has overseen a number of crucial emergency loan packages for despairing economies, most recently for Greece and Pakistan.

The IMF is also being eyed to help orchestrate potential bailouts for Portugal and Ireland as Europe suffers a painful debt crisis. The organization is also working to help Egypt as that country tries to keep its economy stable amid the government upheaval.

“This sordid episode — no matter how it ultimately plays out — will spell the end of Strauss-Kahn as an effective leader of the IMF, even if he retains his position, which is highly unlikely,” said Eswar Shanker Prasad, an international economics professor at Cornell. “With Strauss-Kahn’s departure, the IMF can no longer be counted on to watch Europe’s back as it becomes increasingly clear that the EU-IMF program in Greece is not working.”

In 2008, Strauss-Kahn was investigated on suspicion that he might have abused his authority in an extramarital affair with an economist who had left the IMF with financial compensation. He kept his position but acknowledged that he had made a “serious error of judgment.”

As a member of the Socialist Party, Strauss-Kahn has been criticized in France as enjoying a lavish lifestyle with expensive cars and suits, which he has denied.

Strauss-Kahn has been helping to transform the IMF after the financial crisis. He wants the organization to have the power to probe financial firms around the world and demand more data. And he is pursuing better indicators of when a country might be going off track economically.

The United States is the biggest shareholder in the IMF and makes its largest financial contribution each year.

Treasury Secretary Timothy F. Geithner, who represents the United States at the IMF, has been pushing the organization to pressure China to allow its currency to increase in value, which the country has resisted. Allowing the renminbi to appreciate would make it easier for American companies to sell in China.

Under Strauss-Kahn, the IMF has exerted only modest pressure on that nation, aware that China is an important emerging power. The IMF, which once had as many as 3,000 employees before down-sizing, is based near Foggy Bottom. Strauss-Kahn’s deputy, John Lipsky, has already announced his departure for later this summer. [source]

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