French police detained former IMF chief Dominique Strauss-Kahn for questioning on Tuesday over allegations he took part in orgies in Paris and Washington paid for by a pair of businessmen.

"/> French police detained former IMF chief Dominique Strauss-Kahn for questioning on Tuesday over allegations he took part in orgies in Paris and Washington paid for by a pair of businessmen.

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DOMINIQUE STRAUSS-KAHN

Strauss-Kahn held for questioning over sex ring

French police detained former IMF chief Dominique Strauss-Kahn for questioning on Tuesday over allegations he took part in orgies in Paris and Washington paid for by a pair of businessmen.

Strauss-Kahn held for questioning over sex ring
WTO

The 62-year-old former Socialist minister, who until last year was seen as the frontrunner to replace Nicolas Sarkozy as president of France, had been due to face questioning as a witness, but prosecutors said he was now a suspect.

He arrived at a police station in the northern city of Lille just before his 9am (0800 GMT) appointment for what could be up to 48 hours of questioning about his role in the latest sex scandal to beset his ruined career.

Shortly after his arrival, prosecutors said he would instead be questioned on suspicion of “pimping and misuse of company funds” and was thus not free to leave and could face charges and see his questioning stretch to 96 hours.

Afterwards, if a judge agrees, he could be remanded in custody.

Investigating magistrates want to know whether he was aware that the women who entertained him at parties in restaurants, hotels and swingers’ clubs in Paris, Washington and several European capitals were paid prostitutes.

They will also seek to determine whether Strauss-Kahn knew that the escorts were paid for by funds fraudulently obtained by his hosts from a French public works company for which one of them worked as a senior executive.

Paying a prostitute is not in itself illegal in France, but profiting from vice or embezzling company funds to pay for sex can lead to charges.

The former director of the International Monetary Fund admits that he has led an adventurous sexual life, but denies that he was implicated in pimping or corruption and has indicted he will deny any criminal wrongdoing.

Two northern businessmen, Fabrice Paszkowski a medical equipment tycoon with ties to Strauss-Kahn’s Socialist Party, and David Roquet, former director of a local subsidiary of building giant BTP Eiffage, have been charged.

The pair has alleged links to a network of French and Belgian prostitutes centred on the Carlton Hotel in Lille, a well-known meeting place of the local business and political elite in a city run by the Socialist Party.

In all, eight people have already been charged in relation to the “Carlton affair” — including three executives from the luxury hotel itself, a leading local lawyer and the local deputy police chief, Jean-Christophe Lagarde.

The last of the sex parties is said to have taken place during a trip to Washington and the IMF headquarters between May 11th and 13th last year by Paszkowski and Roquet, in part to discuss Strauss-Kahn’s presidential bid.

One day later, on May 14th, Strauss-Kahn’s career fell apart when he was arrested in New York following allegations that he had subjected chambermaid Nafissatou Diallo to a brutal sexual assault in his hotel suite.

The case against him eventually fell apart when prosecutors began to doubt Diallo’s credibility as a witness, and Strauss-Kahn returned home to France to face further investigations and scandal.

First, 32-year-old French writer Tristane Banon accused him of attempting to rape her in 2003. Prosecutors decided that there was prima facie evidence of a sexual assault, but ruled that the statute of limitations had passed.

Then, Strauss-Kahn’s name was linked to the entirely separate Carlton case after police probing a ring linked to notorious Belgian pimp “Dodo la Saumure” — Dominique Alderweireld — were given his name by suspected escorts.

The involvement of the businessmen in the vice ring has raised suspicions that they intended to curry favour with a presidential contender by procuring women for him, but they are reported to have denied this during questioning.

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ECONOMY

World unprepared for next financial crisis: ex-IMF chief Strauss-Kahn

The world is less well equipped to manage a major financial crisis today than it was a decade ago, according to Dominique Strauss-Kahn, a former chief of the International Monetary Fund (IMF).

World unprepared for next financial crisis: ex-IMF chief Strauss-Kahn
Former French Economy Minister and former managing director of the International Monetary Fund (IMF) Dominique Strauss-Kahn , poses during a photo session in Paris on Thursday. Photo: JOEL SAGET / AFP
In an interview with AFP, the now-disgraced Strauss-Kahn — who ran the fund at the height of the 2008 financial meltdown — also said rising populism across the world is a direct result of the crisis. 
 
Strauss-Kahn resigned as head of the IMF in 2011 after being accused of attempted rape in New York, although the charges were later dropped. He settled a subsequent civil suit, reportedly with more than $1.5 million.
 
Q: When did you become aware that a big crisis was brewing?
 
A: When I joined the IMF on Nov 1, 2007, it became clear quite quickly that things were not going well. That is why in January 2008, in Davos, I made a statement that made a bit of noise, asking for a global stimulus package worth two percent of each country's GDP. In April 2008, during the IMF's spring meetings, we released the figure of $1,000 billion that banks needed for their recapitalisation.
 
Q: Did the Bush administration grasp the danger of Lehman Brothers going bankrupt?
 
A: No, and that is why Treasury Secretary Henry Paulson decided not to save Lehman, because he wanted to make an example of it in the name of moral hazard. Like everybody else, he considerably underestimated the consequences. Allowing Lehman to go under was a serious mistake. Especially because only a week later they were forced to save the insurer AIG, which was much bigger.
 
Q: Ten years on, are we better equipped to deal with a crisis of such a magnitude?
 
A: No. We have made some progress, particularly in the area of banks' capital adequacy ratios. But that is not nearly enough. Imagine Deutsche Bank suddenly finding itself in difficulty. The eight percent of capital it has at its disposal are not going to be enough to solve the problem. The truth is that we are less well prepared now. Regulations are insufficient.
 
Q: How so?
 
A: After 2012-2013 we stopped talking about the need to regulate the economy, for example concerning the size of banks, or concerning rating agencies. We backtracked, which is why I am pessimistic about our preparedness. We have a non-thinking attitude towards globalisation and that does not yield positive results.
 
Q: Do we still have international coordination?
 
A: Coordination is mostly gone. Nobody plays that role anymore. Not the IMF and not the EU, and the United States president's policies are not helping. As a result, the mechanism that was created at the G20, which was very helpful because it involved emerging countries, has fallen apart. Ten years ago, governments accepted leaving that role to the IMF. I'm not sure it is able to play it today, but the future will tell.
 
Q: Do you believe that Donald Trump's election is a consequence of the crisis?
 
A: I believe so. I'm not saying that there was a single reason for Trump's election, but today's political situation is not unconnected to the crisis we lived through, both in the US with Trump and in Europe.
 
Q: Connected how?
 
A: One of the consequences of the crisis has been completely underestimated, in my opinion: the populism that is appearing everywhere is the direct outcome of the crisis and of the way that it was handled after 2011/2012, by favouring solutions that were going to increase inequalities.
 
Quantitative easing (by which central banks inject liquidity into the banking system) was useful and welcome. But it is a policy that is basically designed to bail out the financial system, and therefore serves the richest people on the planet.
 
When there's a fire, firemen intervene and there is water everywhere. But then you need to mop up, which we didn't do. And because this water flowed into the pockets of some, and not of everyone, there was a surge in inequality.
 
By AFP's Antonio Rodriguez