Transcript of a Teleconference Press Briefing on the Executive Board's Review of the Managing Director's Conduct

October 25, 2008

by Masood Ahmed, Director, External Relations, with A. Shakour Shaalan, Dean of the Executive Board, and Joan Powers, Assistant General Counsel
Washington, D.C.
Saturday, October 25, 2008

MR. AHMED: Good evening. Thank you very much for joining this teleconference. I am Masood Ahmed. I am Director of External Relations at the IMF. I am sorry to arrange this on a Saturday afternoon for you, but the reason we've organized this conference call is because the Executive Board of the IMF has been meeting all day today under the chairmanship of Mr. Shaalan, the Dean of the Board, to conclude its inquiry into the allegations of improper conduct by the Managing Director. The purpose of the conference call is simply to walk you through the material that we have just posted on the web site for you and to answer any questions of clarification that you have.

The way I'd like to proceed is with me here today is Mr. Shakour Shaalan, as I said, the Dean of the IMF Board, who chaired today's meeting. I also have Joan Powers, who is Assistant General Counsel at the IMF. Both of them will be here to answer questions as well, but to begin with I'd like to ask Mr. Shaalan to just walk you through the material that has been agreed and the put out by the IMF Board at the conclusion of its meeting today. Mr. Shaalan?

MR. SHAALAN: Good evening, and thank you very much, Mr. Ahmed. As Mr. Ahmed noted, in my capacity as Dean of the IMF Board, I would like to inform you that I today chaired a meeting of the Board to discuss the conduct of the Managing Director, Mr. Dominique Strauss-Kahn. At the conclusion of the meetings, three documents will be shortly issued to the press. These are the following: The standard concluding statement of the Executive Board, which we usually issue after a Board meeting, on the MD's personal conduct. That is the first document. The second document is the statement of the independent external counsel who was retained on the same matter. And thirdly, a note on the applicable standards of conduct under the Managing Director's contract.

MR. AHMED: Thank you. Before inviting you ask any questions, let me also point out to you that in addition to this package of three documents that Mr. Shaalan referred to, we have also issued separately, and you should have also available to you now, a statement by the Managing Director himself as a response to the conclusion of the review by the Executive Board. So you should have that fourth document as well available to you.

At this point we're happy to take any questions of clarification. Please identify yourself and your affiliation.

QUESTION: Can you walk us through the report? I had a moment to glance at it and it talked about a consensual affair. Can you describe what it was that you were looking for and this consensual affair how in your view it met the standards obviously of conduct governing the Managing Director?

MR. AHMED: Let me start on that and point you to the right bits there and then I'll ask Joan Powers if she would like to add something to it. I'd like to start off by pointing you actually to the statement of the Executive Board because that is the conclusion of the review, and of course the other bits are inputs into it. In pointing to that, let me point you all, first of all, to the third paragraph of that statement which starts with the term, `Based on the facts established by the External Counsel and the advice provided by the General Counsel and Ethics Officer, the Board concluded that there is no harassment, favoritism, or any other abuse of authority by the Managing Director.' And then let me also point you to the fourth paragraph, which notes that this incident, this consensual relationship, was regrettable and reflected a serious error of judgment on the part of the Managing Director. And as that statement notes and as you will also see from the accompanying statement that the Managing Director himself has issued, he has both taken responsibility for that error and apologized for it.

The Executive Board also stressed that the personal conduct of the Managing Director sets an important tone for the institution and that that must be beyond reproach at all times. So that if you like is the conclusion that the Board drew and the decision that it made.

In terms of the report of the independent counsel, of course, as you say that you've only had a few minutes to look at it and it's a relatively short report but I'm sure you'll have more time to look at it, let me simply make one point there which is that this is the report that was submitted by the independent counsel to the Executive Board and the Executive Board took the decision that the entire document that they received should be made public.

And I think in that document you will see it does attempt to ask a number of questions and provide the facts which underpin the decision of the Executive Board. And I'd like to ask Mr. Shaalan or Ms. Powers whether there is anything you would like to add to what I have said. Mr. Shaalan?

MR. SHAALAN: Thank you, Mr. Ahmed. I think Mr. Ahmed has given you a good summary of what the independent counsel documents and what the Board was doing today. Basically, we examined, and we did so very carefully, the report to the Board by the independent investigator. We have discussed this thoroughly, as I said, and our conclusions are contained in the statement by the Executive Directors, which has been released or will be released shortly.

MR. AHMED: Ms. Powers?

MS. POWERS: Yes, I would simply add to what Mr. Ahmed said, I think if you look at the findings and conclusions of the external counsel with the analysis done by the (the IMF's) general counsel it essentially lays out two broad questions that needed to be addressed.

The first was whether the establishment of the relationship constituted sexual harassment or whether it was consensual. And second, even if it was consensual, did it have any impact in the workplace in terms of the female staff member receiving either favoritism or, conversely, adverse treatment because of the relationship. That was essentially the test that I think the external counsel was seeking to answer in his fact finding.

MR. AHMED: Thank you. We'll go to the next question.

QUESTION: I just wanted to clarify. So what you guys are saying is that the Managing Director still has the complete confidence of the Board, and I just wanted you guys to comment a bit on how his working relationship continues from here and generally your level of happiness with the job that he's doing.

MR. AHMED: Mr. Shaalan?

MR. SHAALAN: Thank you very much, Mr. Ahmed. The mood of the Board today was very, very positive and our conclusion was that this will in no way affect the effectiveness of the Managing Director in the very challenging and difficult period ahead. The Managing Director is very competent in carrying out his job and this was an unfortunate incident where he expressed his regrets and the Board has accepted his apologies, and the work of the Fund will continue in a normal manner.

MR. AHMED: Thank you very much, Mr. Shaalan. I'd like to just point you, Chris, to the last sentence of the Board's press release. If you see there, that's the statement there which is intended exactly to convey the point that you raised. Thank you. Let's go to the next question.

QUESTION: Can you say was the vote on the Board unanimous? Did all 24 members participate? Is there any type of censure that was approved by the Board regarding this incident? I guess those are my two questions.

MR. AHMED: Thank you. Mr. Shaalan?

MR. SHAALAN: Thank you. Yes, the decision of the Board was unanimous. There were no deviations in the Board. With regard to censure, as I mentioned, we had expressed the regrets of the Managing Director, and I personally spoke to him after the meeting and informed him that this should not happen again.

MR. AHMED: Thank you very much. Are there any other questions?

QUESTION: My question is given that there was no sexual harassment, nor any favoritism, what specifically did the Managing Director do wrong in your view? Was he wrong to have had this relationship at all or was he wrong not to have reported it to the ethics offices detailed in the document?

MR. AHMED: I think the point that I'd just like to point you to there is, first of all again I keep coming back to this because it is our main document which is the statement of the Board, and the point that's stressed in that statement of the board, the fourth paragraph, says that the incident was regrettable and a serious error of judgment, and the point that is made there is that the personal conduct of the Managing Director sets an important tone for the institution and as such must be seen to be -- must be and be seen to be beyond reproach.

And I think the Managing Director's own statement also takes responsibility for it because he himself has said that he considers this incident to be a serious error of judgment, even though as you say it was a consensual relationship and there was no harassment, favoritism or any other abuse of authority, the very fact that he entered into a consensual relationship with a staff member was both in his view a serious error of judgment, and of course that's also the view that the Board has taken. And I think it's for that error of judgment that he has apologized and the Board has accepted. Thank you.

QUESTION: This is a question for Mr. Shaalan. This may conclude the Board's investigation of this incident, but I'm wondering whether you think Mr. Strauss-Kahn still has a job ahead of him in regaining the trust or his credibility among the staff. I understand that there are staff members, maybe particularly female staff members, who have been quite upset by this and I'm wondering what steps you think he needs to do with the staff to rebuild his position with them.

MR. SHAALAN: I'll have to agree with you that there is a number of staff, particularly the female members, who are not at all happy and do not approve of the Managing Director's behavior. The Managing Director as Mr. Masood Ahmed has said has expressed his regrets and I don't think we can ask him to do more at this time other than publishing the statement that we have published. The Managing Director is intending to send a note to the staff expressing his regret, I'm not sure what's going to be included in it, but he is planning to send a note to the staff on the matter possibly by -- certainly within the next day or two.

MR. AHMED: The only thing that I would add to that question is that if you look at the statement that the Managing Director has issued which should also be in the package that you have, the third paragraph of that does include in there not only a recognition of the point that the Managing Director sets the tone for the institution, but a commitment going forward to uphold the high standards that are expected of his institution and I think that is the Managing Director's intent as he set it out and there's no doubt he will be following-up on in many ways in the coming days.

We'll take maybe two more questions and then try to bring this to closure.

QUESTION: Masood, you have been talking, you and Mr. Shaalan, about the difficult challenges ahead in these times and I would like to add about the moral authority that the IMF has in the eyes of many member states. Do you think that this incident will not affect not only the relationship with the staff and the Managing Director's relationship with staff but also with the member states?

MR. AHMED: The only thing I would say to you is that the Board of the IMF is the governance structure that represents the member states and the very fact that the Board has conducted what has been a thorough independent inquiry, and that at the end of that inquiry the Board has concluded that there was no harassment, favoritism, or abuse of office, that the Board has recognized that there was an error of judgment and accepted the Managing Director's apology for it, and that the Board has said that it now considers this matter closed, and looks forward to working with the Managing Director and the staff on the challenges that you mentioned, I think all of those are in many ways for us a representation of the fact that the member states acting through the Board have now decided that this matter can be brought to closure and to move forward with the challenges that face us in this difficult period in working with the membership. Let me turn to Mr. Shaalan if you'd like to add something.

MR. SHAALAN: As a member of the Board representing a number of countries in the Fund membership, I conclude what Mr. Ahmed just said. The effectiveness of the Managing Director has been proven, we will continue to work with him, and there is little doubt in my mind that while there is some confidence that may have been lost, he will regain it very soon.

MR. AHMED: Thank you. We'll take one more question.

QUESTION: I was wondering if at any stage Mr. Strauss-Kahn actually offered to resign.

MR. SHAALAN: No, Mr. Strauss-Kahn was not asked to resign at any stage.

QUESTION: No, I was wondering if he offered at all.

MR. AHMED: To the best of my knowledge, the Managing Director has not offered to resign. He has offered as he has said from the beginning that he would be guided by the outcome of the Board's decision on this. And as we've just pointed out, the Board's decision showed -- as the Board's statement shows that there was no harassment, favoritism, or other abuse of authority, and under those circumstances the question of resignation has not arisen at all.

Thank you very much for all of your time. As I said, this material will be embargoed until 7:00 p.m. -- 7:05 this material is embargoed until, and we thank you for participating in this conference call.


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