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Long-Ago Affair Might Damage Turkish Candidate’s Chances to Lead IMF

On paper Kemal Dervis would seem to be the perfect candidate to succeed Dominique Strauss-Kahn as leader of the International Monetary Fund.

Kemal Dervis
- | AFP | Getty Images
Kemal Dervis

Currently a vice president at the Brookings Institution, he was Turkey’s economy minister from 2001 to 2002 and was widely credited with bringing Turkey out of a severe financial crisis by privatizing state assets and slashing budget deficits amid fierce political opposition.

He speaks fluent French, German and English and is a veteran of I.M.F.-style bureaucracies like the World Bank and the United Nations.

But, Mr. Dervis, it turns out, has a secret that could disqualify him from being considered for the job. Years ago, while a senior executive at the World Bank, he had an affair with a female subordinate who now works at the I.M.F., according to a person with direct knowledge of the affair.

This person’s account was confirmed by Stanislas Balcerac, a former World Bank staff economist who worked on the same floor with Mr. Dervis and the woman.

"I have not put my name forward, nor has anyone called me about the job ... I am flattered, of course, but that is all I can say at the moment." -Vice President, Brookings Institution, Kemal Dervis

In a brief interview Thursday, Mr. Dervis declined to discuss the details of his personal life. But after Mr. Strauss-Kahn’s departure over allegations of a sexual assault, questions of past impropriety could be enough to hurt a candidate’s chance.

Mr. Dervis, 62, was not married at the time of the affair, but the woman was, according Mr. Balcerac, who says he bears no ill will toward either person. In fact, he praises Mr. Dervis as one of the brightest, most adept and bureaucracy-beating executives at the World Bank at the time.

“He was not your standard bureaucrat,” he said. He made “decisions quickly and was extremely dynamic.”

Indeed, the professional talents of Mr. Dervis are a reason he has been widely mentioned this week as a possible candidate for the top job at the I.M.F. He would represent a potential bridge between the European establishment from which the I.M.F. chief has traditionally been chosen, and the emerging-economy countries that are now demanding to play a bigger role in global financial institutions. Turkey, with its 9 percent growth rate last year and its ambition to become a major regional actor in the Middle East, would certainly fit that bill.

Most intriguingly, perhaps, Mr. Dervis is a close friend of George Papandreou, the prime minister of Greece, whom he has been informally advising over the last two years.

The two men became acquainted in 2001 when Mr. Dervis was in charge of the Turkish economy and Mr. Papandreou was foreign minister for his government. Since then, Mr. Dervis has provided counsel in a variety of ways.

He has been an active participant in Mr. Papandreou’s annual summer ideas conference held on different Greek islands each year. He has huddled with him at the Brookings Institution in Washington. And he has, insiders say, shared many late-night phone calls with the Greek prime minister.

Book makers in London have been giving Mr. Dervis the second-best chance to get the I.M.F. job after Christine Lagarde, the finance minister of France. And Mr. Dervis has many professional admirers.

“He is the man for the job,” said Dani Rodrik, an expert on globalization and development at the John F. Kennedy School of Government at Harvard. “He would be a truly meritocratic appointment.”

But Mr. Dervis said Thursday that he was in no way prepared for this sudden burst of publicity.

“Look, I have not put my name forward, nor has anyone called me about the job,” Mr. Dervis said. “I am flattered, of course, but that is all I can say at the moment.”

No doubt, the affair in question is very old news. Mr. Balcerac points out that years ago the culture at the World Bank was looser and it was not uncommon for senior executives to have affairs with those working for them.

All of this changed in 2007, when the World Bank had its own, more minor scandal: Its president at the time, Paul D. Wolfowitz, promoted a woman he was involved with.

The I.M.F. has not said publicly who it is considering to succeed Mr. Strauss-Kahn.

John Lipsky, an American, has taken control as acting managing director and while there had been an expectation that Mr. Strauss-Kahn would leave before his term ended in October 2012 to run for the French presidency, it is not clear what type of short list, if any, the fund board has drawn up.

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