IMF CHIEF FACES SEX CHARGES
NEW YORK/PARIS (Reuters) - IMF chief Dominique Strauss-Kahn was charged with attempting to rape a New York hotel maid, in a scandal that appeared to wreck his hopes of running for president of France and to open questions over his leadership of the global lender.
The charges on Sunday threatened to create a leadership vacuum at the IMF, overseer of the global economy, and threw wide open the French presidential election next April, for which opinion polls had made Strauss-Kahn the front-runner.
The 62-year-old Socialist, a key player in the response to the 2007-09 global financial crisis and to Europe's debt woes, was taken off an Air France plane minutes before it left for Paris from John F Kennedy International Airport on Saturday.
A hotel maid, 32, alleged Strauss-Kahn sexually assaulted her in his $3,000-a-night suite at the upscale Sofitel in Times Square on Saturday, police spokesman Paul Browne said. The IMF chief was charged with a criminal sexual act, unlawful imprisonment and attempted rape.
"She told detectives he came out of the bathroom naked, ran down a hallway to the foyer where she was, pulled her into a bedroom and began to sexually assault her, according to her account," Browne told Reuters.
"She pulled away from him and he dragged her down a hallway into the bathroom where he engaged in a criminal sexual act, according to her account to detectives. He tried to lock her into the hotel room."
Strauss-Kahn is expected to go before a state court later on Sunday. One of his lawyers, Benjamin Brafman, told Reuters his client "will plead not guilty."
Browne said the head of the International Monetary Fund does not have diplomatic immunity and appeared to have fled the hotel after the incident, leaving his cell phone behind.
The arrest caused shock and disbelief in France.
"The news we received from New York last night struck like a thunderbolt," said Socialist leader Martine Aubry, appealing for party unity.
Francois Bayrou, a centrist opponent of Strauss-Kahn, said: "All this is completely astounding, immensely troubling and distressing. If the facts prove true ... it's something degrading for all women. It's terrible for France's image."
Far-right leader Marine Le Pen said her rival's presidential hopes had been crushed. Strauss-Kahn and Le Pen have led recent opinion polls ahead of conservative President Nicolas Sarkozy, even though the IMF chief had yet to declare his candidacy.
In a statement, the Fund declined to comment on the case, saying only that it "remains fully functioning and operational."
Greek officials said the arrest would not affect the country's fiscal reforms but could cause some short-term delays in discussions over the EU/IMF bailout, in which Strauss-Kahn was involved.
Germany's finance minister Wolfgang Schaeuble said a meeting on Monday to discuss the euro zone's bailout plans would move ahead as scheduled.
The IMF said its No. 2 official, John Lipsky, would step in as acting chief and it named another official to attend Monday's meeting in Brussels.
WARNINGS OF "MEDIA CIRCUS"
Strauss-Kahn's wife Anne Sinclair, a celebrity in her own right as a former television interviewer, appealed for "restraint and decency."
"I do not believe for a single second the accusations leveled against my husband," she said in a statement. "I do not doubt his innocence will be established."
One of the IMF chief's French-based lawyers, Leon Lef Forster, similarly warned of the risk of "a media circus."
According to New York state law, a criminal sexual act carries a potential sentence of 15-20 years, the same as attempted rape. Unlawful imprisonment carries a potential sentence of three to five years.
The allegation is a major embarrassment to the IMF, which has authorized billions of dollars of lending to troubled countries and played a major role in the euro zone debt crisis.
Popularly known by his initials DSK, the IMF managing director had been expected to declare by late June if he would run for president of France. The latest opinion polls ranked him as a clear winner over conservative incumbent Sarkozy.
"The case and the charges ... mark the end of his campaign and pre-campaign for the presidency and will most likely prompt the IMF to ask him to leave his post," National Front leader Le Pen told i-Tele television.
Even Strauss-Kahn's political allies were pessimistic.
"The most likely outcome is that this case will stick and even if he pleads not guilty, which he may be, he won't be able to be candidate for the Socialist primary for the presidency and he won't be able to stay at the IMF," said prominent Socialist Jacques Attali.
The IMF board was scheduled to meet later on Sunday to discuss the developments.
If Strauss-Kahn were out of the presidential race, leading candidates for the Socialist presidential ticket include party leader Aubry, left-wing veteran Francois Hollande and Segolene Royal, the candidate beaten by Sarkozy in 2007.
NO STRANGER TO CONTROVERSY
The woman who filed the complaint was treated in hospital for minor injuries, police spokesman Browne said. She has not been named.
The French consul general met Strauss-Kahn overnight under the normal rules of protection for French citizens detained abroad, a spokeswoman for the consulate in New York said.
Strauss-Kahn took over the IMF in November 2007 for a five-year term scheduled to end next year. Before that, he was a French finance minister, member of the French National Assembly and a professor of economics.
He has faced controversy before. In 2008, he apologized for "an error of judgment" after an affair with a female IMF economist who was his subordinate. An inquiry cleared him of harassment and abuse of power, but he was warned by the Fund's board of member countries against further improper conduct.
His arrest follows an announcement on Thursday that his deputy Lipsky would step down in August when his term ends.
A crisis of leadership at the Fund would especially worry European nations, given Strauss-Kahn's pivotal role in brokering bailouts for Iceland, Hungary, Greece, Ireland and Portugal.
"The chances are the successor won't be a European, and will want to rebalance the IMF's priorities away from its massive commitment in Europe," said Jean Pisani-Ferry, director of the Bruegel economic think-tank.
Strauss-Kahn had been due to meet German Chancellor Angela Merkel on Sunday and join euro zone finance ministers in Brussels on Monday to discuss the bloc's debt crisis and how to handle Greece, which is struggling to meet the terms of the joint IMF-EU bailout it received last year.
"This might definitely cause some delays in the short term," a Greek official told Reuters on condition of anonymity. "Strauss-Kahn had a very good knowledge of Greece's situation."
Since taking over the IMF, the Frenchman has won praise for putting it at the center of efforts to tackle the global financial meltdown. He introduced sweeping changes to ensure countries swamped by the crisis had access to emergency loans.
He has overseen changes that have given emerging market countries, such as China, India and Brazil, greater voting power in the IMF, and weighed into thornier issues by urging China to let its currency rise in a dispute with the United States.(Additional reporting by Lesley Wroughton, Noeleen Walder, Catherine Bremer and John Irish; Writing by Mark Trevelyan and Tim Ahmann; Editing by Peter Millership and Anthony Boadle