“He is finished. Nobody thinks he will be back. People are just shocked,” said an IMF economist who would not speak for attribution.
A New York judge denied Strauss-Kahn bail Monday after a short hearing. His attorney had said he would stay in New York with his daughter to await trial. But prosecutors described him as a flight risk.
Taken into custody Saturday, he was scheduled to be transferred Monday night to the Rikers Island jail, the standard holding facility for people held without bail while awaiting trial. New York City officials said he would be in protective custody for his own safety.
The IMF’s second-in-command, John Lipsky, has been named acting managing director. At a morning “pep rally,” he urged agency staff members to go about their business — urging them to stay focused on global economic and financial problems.
But employees said they found it disconcerting to see their boss — a well-known French economist who was considered a possible candidate for the French presidency — standing before a judge with a stubbly beard after nearly two days in jail.
“It’s wrenching. The guy has really done a lot for the institution. It’s not something we’ve ever been exposed to in this fashion,” said one employee who spoke by phone on the condition of anonymity. “You can’t avoid it. Your neighbors are watching the news and they’re talking about it. Your kids go to school and they’ll hear about it.”
As they processed the news, some inside the agency were almost grief-stricken, while others noted that Strauss-Kahn had been warned by the IMF board about his relationships with women after it was disclosed in 2008 that he was having an affair with a member of the staff. He was reprimanded for what he conceded was a serious lapse in judgment but was allowed to remain in his job by a board that accepted his apology and viewed him as “repentant.”
Several IMF officials and staff members said they thought it would take a rapid and thorough exoneration of Strauss-Kahn for him to remain in his job.
On Monday, the IMF board held what it described as an informal meeting about Strauss-Kahn, but in a subsequent statement gave little insight about his future with the agency.
“The Board was briefed regarding criminal charges that have been brought against the Managing Director during a private visit to New York City,” IMF spokeswoman Caroline Atkinson said in an e-mailed comment after the meeting. “The IMF and its Executive Board will continue to monitor developments.”
The United States, which is the largest contributor to the IMF among its 187 members, will play an influential role in deciding Strauss-Kahn’s fate at the agency and the choice of any successor. The U.S. representative on the agency’s executive board, Meg Lundsager, did not respond to a request for comment. Nor did White House or Treasury officials comment about whether Strauss-Kahn should remain in the job.
In debates about the global economy and in particular over the resolution of an ongoing government debt crisis in Europe, Strauss-Kahn has been supportive of U.S. positions.
The IMF, many analysts said, has a strong executive pool that will weather Strauss-Kahn’s departure.
Strauss-Kahn, 62, did not enter a plea Monday. His attorney, Benjamin Brafman, said Strauss-Kahn would deny the charges, arising from the alleged assault on a maid at the Sofitel hotel in midtown Manhattan on Saturday. The complaint presented by prosecutors charges Strauss-Kahn with attempted rape, two counts of a criminal sexual act, two counts of sexual abuse, unlawful imprisonment and forcible touching.
In arguing against bail for Strauss-Kahn, Assistant District Attorney John A. McConnell said, “He has almost no incentive to stay in this country and every incentive to leave.” The extradition treaty between France and the United States does not require either country to deliver its citizens for prosecution — a fact that stifled pursuit of rape charges against French director Roman Polanski.
McConnell also said the authorities were investigating information that Strauss-Kahn may have sexually attacked another woman.
“Some of this information includes reports that he has, in fact, engaged in conduct similar to the conduct alleged in this complaint on at least one other occasion, and we are attempting to verify,” the prosecutor said, noting that the process would take some time.
An IMF spokesman said Strauss-Kahn does not have diplomatic immunity, and Brafman, in a brief interview, said Strauss-Kahn would not claim any diplomatic protection.
In Europe, political leaders jockeyed to try to ensure that one of their own would replace Strauss-Kahn as head of the IMF, while the media debated what his arrest would mean for French politics. New media reports surfaced about other sex-related allegations involving Strauss-Kahn, while there were also conspiratorial rumblings that he might have been set up.
Although the IMF traditionally has been headed by a European, pressure has been mounting to open up the job to leading economic minds from Asia, Latin America and Africa. The IMF has been moving to grant more say to emerging giants such as China, Brazil and India.
But German Chancellor Angela Merkel, among Europe’s most influential leaders, on Monday suggested that a European should hold on to the post, particularly when the region is in the midst of a major debt crisis.
In the “medium term,” Merkel told reporters, candidates from emerging nations should have a right to head both the IMF and World Bank. “However, I believe that at the current stage, when we have much debate in connection with the euro zone, that there are good grounds for Europe to provide good candidates,” she said.
Analysts said the absence of Strauss-Kahn from the IMF’s ongoing work could take a limited toll on attempts to stanch the deepening debt crisis in Europe. His arrest came just as European leaders and the IMF are in talks over a second major bailout for Greece, finalizing provisions of a $110 billion bailout of Portugal, and reviewing the terms of a program for Ireland.
In previous negotiations, Strauss-Kahn’s stature and personal involvement brought an outside voice with insider credentials to the bargaining table, helping persuade skeptical voices in Europe to come up with a credible aid package for Greece, while also persuading the Greeks to sign on to tough austerity measures.
Strauss-Kahn, analysts say, particularly helped the Europeans focus on the scope of the debt crisis they faced, cajoling them into securing the long-term future of the euro by creating a permanent bailout fund from which to draw for other countries in crisis.
Describing him as “a political heavyweight with long-standing connections,” Strauss-Kahn “could do much to knock European heads together,” said Alessandro Leipold, a former acting director of the IMF’s European Department and chief economist at the Lisbon council.
Washington Post staff writers Steve Hendrix and Anthony Faiola in Lisbon contributed to this report.