IMF boss charged with sex assault

Steve Dinneen
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■ Bailout meeting with Angela Merkel is cancelled

■ Greek officials worry arrest could postpone rescue

■ Deputy managing director John Lipsky takes reins at IMF

THERE were fears last night that crunch Eurozone bailout talks could be derailed following the arrest of the IMF chief on sex charges.

Dominique Strauss-Kahn was hauled off a jet preparing to take off for France and charged with sexually assaulting and attempting to rape a maid in a New York hotel.

The shock arrest has raised concerns that negotiations to finalise the Portuguese bailout and the second Greek rescue package could be overshadowed or even postponed.

A meeting with German chancellor Angela Merkel was yesterday cancelled and Strauss-Kahn’s deputy will fill in during talks today and tomorrow regarding the growing Eurozone crisis.

Greek officials spoke of their fears yesterday. Labour minister Louka Katseli said: “This adds uncertainty to the prospect of early resolution. The more uncertainty exists in terms of major institutions, the higher the cost for a country like Greece. What is needed are firm decisions [to ensure] financing for the next years.”

The IMF moved to dispel the concerns, releasing a statement saying the organisation “remains fully functioning and operational”.

Strauss-Kahn’s deputy John Lipsky has now taken over as acting managing director. His first job was to hold a meeting last night to brief staff on the latest developments in their estranged leader’s case.

Strauss-Kahn is alleged to have carried out a “brutal” attack on a hotel maid in a £1,900-a-night suite in the New York Sofitel. The maid claims the 62-year-old emerged naked from the bathroom, ran towards her and dragged her down a hallway into the bathroom, where he engaged in a criminal sexual act. It is alleged he then attempted to lock her in the hotel room before fleeing the building, leaving behind personal belongings including his mobile phone.

If convicted of the charges he could face more than 20 years behind bars. His lawyer says he will plead not guilty.

The charges throw the French Presidency wide open. Strauss-Kahn was expected to announce over the coming weeks that he would stand down as IMF boss to run for the position. He has been tipped by pollsters as the only Socialist who can unseat incumbent Nicolas Sarkozy. However, his run seems to have ended before it had even begun, with commentators confident that even if the charges were dropped he would still be unable to launch a successful bid. The French Socialist party is now said to be holding crisis talks.

Markets could dip this morning on the added uncertainty in the Eurozone.