April 20, 2024

At I.M.F., a Strict Ethics Code Doesn’t Apply to Top Officials

Over the last four years, the fund has tightened internal systems for catching ethical misconduct among its 2,400 staff members, establishing a telephone hot line for complaints like harassment; publishing details of complaints in an annual report; and empowering an ethics adviser to pursue allegations, which last year led to at least one dismissal.

But the fund’s board members remain largely above these controls. The ethics adviser, for example, is not able to investigate any of them.

The board is responsible for policing its own directors as well as the managing director. It has a five-person ethics committee, whose work is confidential. And the only way the board can discipline its members is to write a warning letter to them or to their home countries, or the group of countries that appointed them.

“There are a lot of controls in place when it comes to the staff, but not for the leadership,” said Katrina Campbell, a compliance and ethics expert at Global Compliance.

The I.M.F.’s ethics policy has come under intense scrutiny in recent weeks since the arrest of its managing director, Dominique Strauss-Kahn, on charges of sexually assaulting a hotel housekeeper in New York. Mr. Strauss-Kahn, who denies the charges, has resigned his position at the fund.

In 2007, Ms. Campbell carried out a study of the fund’s ethics policies for the fund’s Independent Evaluation Office. It found that the board lacked satisfactory procedures for disciplining its own members or the managing director for ethical lapses. The report criticized the board’s code of conduct as vague, saying that it “reads, for the most part, as a set of recommendations, rather than rules” and that the board lacked effective enforcement procedures.

In contrast, it praised the staff code of conduct as detailed and offering “a plethora of policies and procedures.”

Until several years ago, the managing director’s position was ambiguous in terms of ethics policy. The person holding that post is both chairman of the executive board and head of the staff, and it was not clear which code of conduct applied, Ms. Campbell said.

But when Mr. Strauss-Kahn was selected for the top spot in November of 2007, the staff code of conduct was written into his contract, she said, although ultimately he remains answerable only to the board.

In 2008, not long after Mr. Strauss-Kahn assumed the top post, the fund was compelled to investigate him for having an affair with a staff subordinate. In that case, the fund hired an outside law firm to handle the inquiry because the ethics officer was not authorized to investigate at that high level. Although Mr. Strauss-Kahn was found not to have abused his position, he was publicly reprimanded by the board for showing poor judgment, and he apologized.

Since then, the law firm, Morgan, Lewis Bockius, has been brought in to investigate several other matters at the fund, according to a person familiar with the situation who requested anonymity because he was not authorized to speak publicly. None of the matters concerned Mr. Strauss-Kahn, this person said, and the cases were not related to allegations of sexual misconduct or affairs.

A spokesman for the fund, William Murray, declined to comment except to say ethics investigations might potentially cover complaints of abuse like intimidation or aggressive behavior.

In January 2009, the executive board formally adopted procedures for ethics investigations: they would be conducted by an outside consultant who reported to the ethics committee.

The fund’s ethics adviser, currently Virginia R. Canter, a former White House associate counsel, publishes an annual report detailing staff complaints. Last year, for example, the ethics adviser pursued 30 allegations of misconduct, resulting in 10 disciplinary actions, including at least one firing.

In 2009, a complaint made to the fund’s ethics hot line involved the conduct of a member of the executive board, according to the ethics adviser’s 2009 published report.

That complaint was referred to the board’s ethics committee. It would have been up to the committee to decide whether to bring in an outside investigator to look into the allegation; it is unclear whether it did so in this case.

As an international organization, the fund’s legal status is complicated. Though it is based in Washington, not all the laws of the United States apply to it. Unlike the staff, the directors are appointed by their home governments rather than the fund and so do not have an exclusive duty of loyalty to the fund. This places great importance on its internal codes of ethical conduct.

The fund insists its codes are strong and that in matters of workplace conduct the executive directors are held to the same high standards as the staff. The code for the board for instance says that directors are expected “to maintain the highest standards of integrity.” They should also “treat their colleagues and the staff with courtesy and respect, without harassment, physical or verbal abuse.”

This month, the ethics rules for lower-level staff members were tightened, making a close personal relationship with a subordinate a potential conflict of interest that had to be reported. Other updates included protections for staff members against retaliation when they allege misconduct.

But the executive board’s code has not been modified since 2003. It does not state specifically whether a close personal relationship with a staff member poses a potential conflict of interest that must be reported.

The board’s ethics committee was established in 1998. But the internal report found that by 2007 the committee had “never met to consider any issues other than its own procedures.” The fund said it could not disclose whether the committee had met since then, because its work is confidential.

Article source: http://www.nytimes.com/2011/05/30/business/global/30fund.html?partner=rss&emc=rss

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