The head of the International Monetary Fund will remain in his job after the agency's executive board concluded that there is no cause for dismissal over an extramarital affair.
The IMF board issued a statement late Saturday saying that the actions of IMF Managing Director Dominique Strauss-Kahn were "regrettable and reflected a serious error of judgment."
However, the 24-member board of directors decided that Strauss-Kahn's relationship with the former IMF employee was consensual and did not involve any type of sexual harassment, favoritism or any other abuse of authority by Strauss-Kahn.
The board, which represents all 185-member nations of the lending institution, reached its conclusions at the end of a daylong meeting at IMF headquarters in Washington.
In a statement, the board said that based on the findings of an outside law firm hired to investigate the matter and discussions Saturday with Strauss-Kahn, that they now consider the incident closed.
Shakour Shaalan, the dean of the executive board, told reporters during a conference call that the board believed that the incident would not harm Strauss-Kahn's effectiveness going forward.
The IMF is expected to play a critical role in providing loans to countries harmed by the current global financial crisis.
The former employee with whom Strauss-Kahn had the affair has been identified as Piroska Nagy, now in London with the European Bank for Reconstruction and Development.
The incident involving Strauss-Kahn occurred 15 months after Paul Wolfowitz resigned as president of the World Bank amid controversy over a pay package for his girlfriend, a bank employee. The World Bank is a sister lending institution to the IMF.