IMF Chief Strauss-Kahn
Caught in "Honey Trap"
By Mike Whitney
 

Updates:  2011-08-24     2011-09-19    2011-11-27  


May 15, 2011 "Information Clearing House" --- I have no way of knowing whether the 32-year-old maid who claims she was attacked and forced to perform oral sex on IMF chief Dominique Strauss-Kahn, is telling the truth or not. I'll leave that to the braying hounds in the media who have already assumed the role of judge, jury and Lord High Executioner. But I will say, the whole matter smells rather fishy, just like the Eliot Spitzer story smelled fishy. Spitzer, you may recall, was Wall Street's biggest adversary and a likely candidate to head the SEC, a position at which he would have excelled. In fact, there's no doubt in my mind that if Spitzer had been appointed to lead the SEC, most of the top investment bankers on Wall Street would presently be making license plates and rope-soled shoes at the federal penitentiary. So, there was plenty of reason to shadow Spitzer's every move and see what bit of dirt could be dug up on him. As it turns out, the ex-Governor of New York made it easy for his enemies by engaging a high-priced hooker named Ashley Dupre for sex at the Mayflower Hotel. When the news broke, the media descended on Spitzer like a swarm of locusts poring over every salacious detail with the ebullient fervor of a randy 6th-grader. Meanwhile, the crooks on Wall Street were able to breathe a sigh of relief and get back to doing what they do best; fleecing investors and cheating people out of the life savings.

Strauss-Kahn had enemies in high places, too, which is why this whole matter stinks to high-Heaven. First of all, Strauss-Kahn was the likely candidate of the French Socialist Party who would have faced Sarkozy in the upcoming presidential elections. The IMF chief clearly had a leg-up on Sarkozy who has been battered by a number of personal scandals and plunging approval ratings.

But if Strauss-Kahn was set up, then it was probably by members of the western bank coalition, that shadowy group of self-serving swine whose policies have kept the greater body of humanity in varying state of poverty and desperation for the last two centuries. Strauss-Kahn had recently broke-free from the "party line" and was changing the direction of the IMF. His road to Damascus conversion was championed by progressive economist Joesph Stiglitz in a recent article titled "The IMF's Switch in Time". Here's an excerpt:

The annual spring meeting of the International Monetary Fund was notable in marking the Fund’s effort to distance itself from its own long-standing tenets on capital controls and labor-market flexibility. It appears that a new IMF has gradually, and cautiously, emerged under the leadership of Dominique Strauss-Kahn.

Slightly more than 13 years earlier, at the IMF’s Hong Kong meeting in 1997, the Fund had attempted to amend its charter in order to gain more leeway to push countries towards capital-market liberalization. The timing could not have been worse: the East Asia crisis was just brewing — a crisis that was largely the result of capital-market liberalization in a region that, given its high savings rate, had no need for it.

That push had been advocated by Western financial markets — and the Western finance ministries that serve them so loyally. Financial deregulation in the United States was a prime cause of the global crisis that erupted in 2008, and financial and capital-market liberalization elsewhere helped spread that “made in the USA” trauma around the world .... The crisis showed that free and unfettered markets are neither efficient nor stable.

— "The IMF's Switch in Time", Joseph Stiglitz, Project Syndicate

So, Strauss-Kahn was trying to move the bank in a more positive direction, a direction that didn't require that countries leave their economies open to the ravages of foreign capital that moves in swiftly — pushing up prices and creating bubbles — and departs just as fast, leaving behind the scourge of high unemployment, plunging demand, hobbled industries, and deep recession.

Strauss-Kahn had set out on a "kinder and gentler" path, one that would not force foreign leaders to privatize their state-owned industries or crush their labor unions. Naturally, his actions were not warmly received by the bankers and corporatists who look to the IMF to provide legitimacy to their ongoing plunder of the rest of the world. These are the people who think that the current policies are "just fine" because they produce the results they're looking for, which is bigger profits for themselves and deeper poverty for everyone else.

Here's Stiglitz again, this time imparting the "kiss of death" to his friend Strauss-Kahn:

Strauss-Kahn is proving himself a sagacious leader of the IMF.... As Strauss-Kahn concluded in his speech to the Brookings Institution shortly before the Fund’s recent meeting: “Ultimately, employment and equity are building blocks of economic stability and prosperity, of political stability and peace. This goes to the heart of the IMF’s mandate. It must be placed at the heart of the policy agenda.”

Right. So, now the IMF is going to be an agent for the redistribution of wealth.... (for) "strengthening collective bargaining, restructuring mortgages, restructuring tax and spending policies to stimulate the economy now through long-term investments, and implementing social policies that ensure opportunity for all"? (according to Stiglitz).

Good luck with that.

Can you imagine how much this kind of talk pisses off the Big Money guys? How long do you think they'd put up with this claptrap before they decided that Strauss-Kahn needed to take a permanent vacation?

Not long, I'd wager.

Check this out from World Campaign and judge for yourself whether Strauss-Kahn had become a "liability" that had to be eliminated so the business of extracting wealth from the poorest people on earth could continue apace:

For decades, the International Monetary Fund (IMF) has been associated among anti-poverty, hunger and development activists as the poster child of everything wrong with the rich world's fiscal management of the rest of the world, particularly of poor nations, with its seemingly one-dimensional focus on belt-tightening fiscal policies as the price of its loans, and a trickle-down economic philosophy that has helped traditional wealthy elites maintain the status quo while the majority stayed poor and powerless. With a world increasingly in revolution because of such realities, and after the global financial crisis in the wake of regulatory and other policies that had worked after the Great Depression being largely abandoned, IMF managing director Dominique Strauss-Kahn has made nothing less than stunning observations about how the IMF and the world need to change policies.

In an article today in the Washington Post, Howard Schneider writes that after the 2008 crash led toward regulation again of financial companies and government involvement in the economy, for Strauss-Khan "the job is only half done, as he has been leading the fund through a fundamental rethinking of its economic theory. In recent remarks, he has provided a broad summary of the conclusions: State regulation of markets needs to be more extensive; global policies need to create a more even distribution of income; central banks need to do more to prevent lending and asset prices from expanding too fast. 'The pendulum will swing from the market to the state,' Strauss-Kahn said in an address at George Washington University last week. 'Globalization has delivered a lot .?.?. but it also has a dark side, a large and growing chasm between the rich and the poor. Clearly we need a new form of globalization' to prevent the 'invisible hand' of loosely regulated markets from becoming 'an invisible fist.'

http://wcampaign.org/issue.php?mid=625&v=y

Repeat: "...a fundamental rethinking of economic theory".... (a greater) "distribution of income"...(more) "regulation of financial companies", "central banks need to do more to prevent lending and asset prices from expanding too fast".

Are you kidding me? Read that passage again and I think you'll agree with me that Strauss-Kahn had signed his own death warrant.

There's not going to be any revolution at the IMF. That's baloney. The institution was created with the clear intention of ripping people off and it's done an impressive job in that regard. There's not going to be any change of policy either. Why would there be? Have the bankers and corporate bilge-rats suddenly grown a conscience and decided to lend a helping hand to long-suffering humanity? Get real.

Strauss-Kahn broke ranks and ventured into no man's land. That's why he was set up and then crushed like a bug.

(Note: Strauss-Kahn has been replaced by the IMF's number 2 guy, John Lipsky, former Vice Chairman of the JPMorgan Investment Bank. How's that for "change you can believe in"?)


© 2011 Mike Whitney


Ian Traynor, UK Guardian, 2011-06-17: Hardline IMF forced Germany to guarantee Greek bailout

Germany was forced to agree to bail out Greece for the second time in a year under strong pressure from the International Monetary Fund following the resignation last month of its head, Dominique Strauss-Kahn, the Guardian has learned.

Under its acting chief, the American John Lipsky [who has since been succeeded by Christine Lagarde], the IMF has taken a more hardline stance. The fund warned the Germans in recent weeks that it would withhold urgently needed funds and trigger a Greek sovereign default unless Berlin stopped delaying and pledged firmly that it would come to Greece's rescue.

Senior officials and diplomats in Brussels confirmed that the IMF threat to pull the plug on its funding, in stark contrast to the more emollient line of Strauss-Kahn, had been defused because of a German climbdown.

So now it's clear why the Americans set Strauss-Kahn up, busted him, and got him replaced as head of the IMF by their man John Lipsky, who has saved the banksters and rentier-capitalist bondholders from a loss by threatening to cause an immediate (as opposed to later) Greek sovereign debt default which would have spread to Spain, Portugal and Italy, eventually bringing the German banks down and wrecking both the German economy and the Euro. But all that has simply been delayed for awhile.


Update 2011-08-24: DSK walks free

On August 23, 2011, all charges against Dominique Strauss-Kahn were dropped

after prosecutors said they no longer trusted the hotel maid who accused him of attacking her in his luxury suite on May 14. Though evidence showed Strauss-Kahn had a sexual encounter with Nafissatou Diallo, prosecutors said the accuser was not credible because of lies she has told, including an earlier false rape claim.Associated Press
Prosecutors also were concerned that the woman had mentioned Mr. Strauss-Kahn's wealth in a recorded conversation with an incarcerated friend, and that she had little explanation for tens of thousands of dollars other people had deposited in her bank account, a law enforcement official has said.Globe & Mail

Of all the many comments to Anne Daguerre's piece DSK walks, but Nicolas Sarkozy will run (in the UK Guardian's "Comment Is Free" section) only one person (SonnyPlaice, 23 August 2011 12:11PM) showed enough intelligence to understand that this was probably a frame-up.

I am surprised (am I?) that so little attention has been paid to the possibility .. one would think the probability, the likelihood .. that all this might have been a frame-up. And indeed a frame-up which has direct and negative ramifications for us citizens of Europe. From what I understand, DSK in his professional life, as head of the IMF, took a relatively left-of-centre position on whether the finance industry or the taxpayer should shoulder the burden of the banking collapse — that is to say he was looking to enforce a greater contribution from Wall Street, the City etc.

His arrest came just as the IMF and the European authorities were about to intervene in the Greek debt crisis (now the Spanish, Italian, global — whatever you fancy — debt crisis). One can presume that he would have tended towards greater (shorter?) haircuts for Greece's banker creditors. Whatever else about it all, his arrest has probably had a negative impact on Europe's taxpayers from a purely economic point of view.

Therefore, one would think, there would be a handful of journalists somewhere building this perspective. But no .. instead a veritable torrent of comment on male/female sexual politics. Could it be that this feminist diatribe has effectively deflected investigation of other aspects of this case? Is the feminist rant the perfect cover for the shenanigans of the banks?

Certainly, the dramatic events of the arrest seem suspiciously theatrical. One notes also how vocal Tim Geithner, he of the US Treasury (a man who believes the taxpayer is always subordinate to the banks) was in asserting that DSK couldn't stay at the IMF and how rapidly Lagarde, who trained in Washington, was installed in his place. There has been no denial, incidentally, that Geithner vetoed calls for 'haircuts' on Irish bank bondholders. I was also rather taken aback to discover just how closely tied in to the American establishment is Sarkozy — 'Sarko L'Americain' — whose stepfather was American CIA operative Frank Wisner and whose grandmother was Jackie Kennedy's aunt. It makes you think.

In a classic "honey trap" the bait is an attractive woman. Does Nafissatou Diallo (pictured at right) seem to you an attractive woman? Does it seem likely to you that DSK would find this woman sexually interesting?

It might be asked: "If this were a honey trap, why use a woman as unattractive as Diallo? Why not one of New York's sexy hookers?" Firstly, very few attractive women in New York work as maids at the Sofitel Hotel, so the possibilities were limited. Secondly, any woman would have to be stupid or desperate for money (the "tens of thousands of dollars" mentioned above?) to agree to be the bait in this case, where the target was the wealthy and powerful head of the IMF. But could it be that, since a woman was needed, they found such a woman in Diallo?

Could it be that there was actually no sexual encounter at all? That the whole thing was simply a frame-up? The main evidence for a sexual encounter seems to be the claim that semen was found on the maid's clothes and that the DNA thereof was DSK's. Perhaps it was (or perhaps the lab report was faked), but since DSK is a known philanderer how difficult would it have been to obtain a sample of his semen from some high-class hooker shortly before this incident, and then to have placed this material on the maid's clothes? Some might think this far-fetched, but perhaps not, considering that the high-stakes goal of the exercise was to remove DSK as head of the IMF (he agreed to resign while he was incarcerated at Rikers, and, as he later admitted, "very scared") and to destroy his chances to succeed Sarkozy as France's next President.

Those who claim that a philanderer is not fit to be a national leader should inform themselves about JFK's philandering.


Update 2011-09-19: DSK admits a "moral failing"

In an interview on France's TF1 television on September 18 DSK appeared to admit to a sexual encounter with the hotel maid Nafissatou Diallo, but insisted that the incident involved no violence or aggression — so why did Diallo lie about an attempted sexual assault? The question as to whether a honey trap was set up, despite the apparent lack of sexual attractiveness of Diallo, remains open. If there was then DSK obviously exercised poor judgement in allowing himself to succumb to whatever temptation Diallo was able to manifest.

In the interview DSK ruled himself out of the running for the French presidential election (set for April/May 2012). It now seems unlikely that he will claim he was set up, even if he believes he was (since this would be seen as an attempt to exonerate himself), and his admission of "moral failure" was necessary to appease those who feel inclined to condemn him. But (according to the Financial Times) 22% of French voters want him to announce his candidacy for the presidential election. The French socialists could, if they were not risk-averse, nominate him as their presidential candidate and the French people could elect him as President. That would be their best way of saying "Fuck you!" both to Sarkozy and to any Americans who may have set DSK up.


Update 2011-11-27: The Epstein Report on DSK

An article by Edward Jay Epstein entitled "What Really Happened to Strauss-Kahn?", published in the New York Review of Books, December 22, 2011, is a forensic report on the events at the Sofitel Hotel in New York on May 14, 2011. According to an article in the UK Telegraph by Philip Sherwell, Epstein's report

detailed the strange behaviour, reportedly captured on surveillance cameras less than two minutes after police were called, of the Sofitel's chief engineer, who was closely involved in the hotel's immediate response to the incident, and another unidentified man who had also been with the maid after she reported an attack.

They were seen exchanging high-fives, clapping hands and doing "what looks like a dance of celebration that lasts for three minutes", he said.

He also noted that as the drama was unfolding at the Sofitel, the head of security for Accor Group [which owns the Sofitel chain of hotels], René-Georges Querry, was arriving at a football match in Paris to sit in the box of Mr Sarkozy. Mr Querry has since said that he heard nothing about what was happening in New York until four hours later.

Another senior Accor security official on duty in Paris that weekend has been suspended after sending a subsequent email claiming credit for "bringing down" Mr Strauss-Kahn, although he later said that the message was a joke to a friend.

Dominique Strauss-Kahn, former IMF chief, may be 'victim of plot to destroy him'

Epstein's article may be read here. Some excerpts:

He [DSK] knew he had a serious problem with one of his BlackBerry cell phones — which he called his IMF BlackBerry. This was the phone he used to send and receive texts and e-mails — including for both personal and IMF business. According to several sources who are close to DSK, he had received a text message that morning from Paris from a woman friend temporarily working as a researcher at the Paris offices of the UMP, Sarkozyís center-right political party. She warned DSK, who was then pulling ahead of Sarkozy in the polls, that at least one private e-mail he had recently sent from his BlackBerry to his wife, Anne Sinclair, had been read at the UMP offices in Paris. It is unclear how the UMP offices might have received this e-mail, but if it had come from his IMF BlackBerry, he had reason to suspect he might be under electronic surveillance in New York. ...

This BlackBerry was discovered by DSK, after he left the hotel, to be missing (and it is still missing). It had been disabled at 12:51 PM, and this could have been done only by someone with technical knowledge about how the BlackBerry worked.

According to the hotelís electronic key records, which were provided to DSKís lawyers, Nafissatou Diallo, a maid, had entered the presidential suite (room 2806) between 12:06 and 12:07 PM ... Ordinarily, cleaning personnel do not enter a room to clean when a guest is still in it. According to DSKís account, his bags were visible in the foyer when he emerged naked from the bathroom into the interior corridor. At this point, according to his account, he encountered the maid in the corridor by the bathroom. (The maid, for her part, says she encountered him coming out of the bedroom.) Phone records show that by 12:13 PM he was speaking to his daughter Camille on his BlackBerry. The call lasted for forty seconds. What took place between DSK and the maid in those six to seven intervening minutes is a matter of dispute. DNA evidence found outside the bathroom door showed her saliva mixed with his semen. The New York prosecutor concluded that a "hurried sexual encounter" took place and DSKís lawyers have admitted as much, while claiming that what happened was consensual.

But, if it happened at all, was it initiated by DSK or by the maid?

After she [Diallo] had left DSK in the presidential suite around 12:13 PM — the time of his call to Camille — she remained on the VIP floor. The hotelís electronic key records indicate that at 12:26 PM she entered 2820, another VIP suite on the same floor that she had already entered several times earlier that morning. Then, one to two minutes later, she went back to the now empty presidential suite.

Epstein's article goes on to note that, after being alerted by the Sofitel security team at 1:03, John Sheehan, director of safety and security at Accor (Sofitel's parent company), contacted others, possibly including René-Georges Querry, the head of security at Accor, who was just then "arriving at a soccer match in Paris where he would be seated in the box of President Sarkozy. ... At 1:31 ... Adrian Branch [Sofitel's security chief] placed a 911 call to the police." Was he instructed to do that by Sheehan, himself instructed by a person higher up in Accor? Someone, perhaps, with an interest in destroying DSK's career?

Epstein then considers the facts involving Room 2820, adjacent to DSK's presidential suite. The hotel's electronic key records show that Diallo entered this room at least three times, before and after her encounter with DSK. But she did not mention this when questioned by the hotel staff or by police. Who was the occupant of that room (Sofitel has refused to say) and why did Diallo enter it?

By the time the 911 call was finally made [writes Epstein], the hotelís management was presumably aware of the political explosion and scandal DSKís arrest would cause. DSK could no longer be a challenger to Sarkozy. Such considerations, and the opportunities they presented, may have had no part whatever in the hotelís handling of the situation, but without knowing the content of any messages between the hotel managers in New York and the security staffs in New York or Paris, among others, we cannot be sure.


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