IMF boss faces sex charges, France in shock

NEW YORK/PARIS (Reuters) - IMF chief Dominique Strauss-Kahn was charged with attempting to rape a New York hotel maid, in a scandal that upends his plans to run for president of France and throws leadership of the global lender into turmoil at the height of the European debt crisis.

The three criminal charges filed on Sunday hours after the IMF boss was taken off a plane shocked policymakers worldwide and left wide open next April's French presidential election. Opinion polls had shown Strauss-Kahn the front runner.

Strauss-Kahn, 62, spent the night in a New York City police cell in Harlem and was to be brought before a judge later on Sunday. His lawyer Benjamin Brafman said he will plead not guilty.

A hotel maid, 32, alleged Strauss-Kahn sexually assaulted her in his $3,000-a-night suite at the luxury Sofitel in Times Square on Saturday, police spokesman Paul Browne said. The IMF chief was charged with a criminal sexual act, unlawful imprisonment and attempted rape.

"She told detectives he came out of the bathroom naked, ran down a hallway to the foyer where she was, pulled her into a bedroom and began to sexually assault her, according to her account," Browne told Reuters.

"She pulled away from him and he dragged her down a hallway into the bathroom where he engaged in a criminal sexual act, according to her account to detectives. He tried to lock her into the hotel room."

The head of the International Monetary Fund, which acts as a guardian of the global economy, does not have diplomatic immunity and appeared to have fled the hotel after the incident, leaving his cell phone behind, Browne said.

Strauss-Kahn, who helped galvanize leaders to inject millions of dollars into the world economy during the 2007-09 global financial crisis and to design rescue plans for Europe's debt-laden countries, was led off an Air France plane minutes before it left for Paris from JFK airport on Saturday.

FRANCE IN SHOCK

According to New York state law, a criminal sexual act carries a potential sentence of 15-20 years, the same as attempted rape. Unlawful imprisonment carries a potential sentence of three to five years.

The arrest caused shock and disbelief in France.

"The news ... struck like a thunderbolt," said Socialist leader Martine Aubry, appealing for party unity.

Francois Bayrou, a centrist opponent of Strauss-Kahn, said: "All this is completely astounding, immensely troubling and distressing. If the facts prove true ... it's something degrading for all women. It's terrible for France's image."

Far-right leader Marine Le Pen said her rival's presidential hopes had been crushed. Strauss-Kahn and Le Pen have led recent opinion polls ahead of conservative President Nicolas Sarkozy, even though the IMF chief had yet to declare his candidacy.

The allegations are a major embarrassment for the IMF. It named the No. 2 official, John Lipsky, as acting chief while Strauss-Kahn is out of Washington and said the fund remains "fully functioning and operational".

Greece, which is struggling to meet the terms of a 110 billion euro European Union/IMF bailout, said the arrest would not affect its fiscal reforms, which have sparked political unrest. However, one official said there could be some short-term delays in bailout talks in which Strauss-Kahn was playing a pivotal role.

The IMF said another Fund official would step in for Strauss-Kahn at a meeting of euro zone finance ministers in Brussels on Monday where debt rescue deals will be discussed.

Strauss-Kahn's wife Anne Sinclair, a celebrity in her own right as a former television interviewer, appealed for "restraint and decency."

"I do not believe for a single second the accusations levelled against my husband," she said in a statement. "I do not doubt his innocence will be established."

One of the IMF chief's French-based lawyers, Leon Lef Forster, similarly warned of the risk of "a media circus."

PRESIDENTIAL BID

Popularly known by his initials DSK, the IMF managing director had been expected to declare by late June if he would run for president of France.

"The case and the charges ... mark the end of his campaign and pre-campaign for the presidency and will most likely prompt the IMF to ask him to leave his post," National Front leader Le Pen told i-Tele television.

Even Strauss-Kahn's political allies were pessimistic.

"The most likely outcome is that this case will stick and even if he pleads not guilty, which he may, he won't be able to be candidate for the Socialist primary for the presidency and he won't be able to stay at the IMF," said prominent Socialist Jacques Attali.

Christine Boutin, president of the Christian Democrat Party, suggested Strauss-Kahn may have been set up.

"I think it's very likely a trap was set for Dominique Strauss-Kahn and he fell into it," she told France's BFM television. "It's a political bomb for domestic politics."

If Strauss-Kahn were out of the race, leading candidates for the Socialist presidential ticket would include party leader Aubry, left-wing veteran Francois Hollande and Segolene Royal, the candidate beaten by Sarkozy in 2007.

NO STRANGER TO CONTROVERSY

Strauss-Kahn took over the IMF in November 2007 for a five-year term scheduled to end next year. Before that, he was a French finance minister, member of the French National Assembly and a professor of economics.

He has faced controversy before. In 2008, he apologized for "an error of judgement" after an affair with a female IMF economist who was his subordinate. An inquiry cleared him of harassment and abuse of power, but he was warned by the Fund's board of member countries against further improper conduct.

His arrest follows an announcement on Thursday that his deputy Lipsky would step down in August when his term ends.

A crisis of leadership at the Fund would especially worry European nations, given Strauss-Kahn's central role in brokering bailouts for Iceland, Hungary, Greece, Ireland and Portugal.

"The chances are the successor won't be a European, and will want to rebalance the IMF's priorities away from its massive commitment in Europe," said Jean Pisani-Ferry, director of the Bruegel economic think-tank.

Since taking over the IMF, the Frenchman has won praise for putting it at the centre of efforts to tackle the global financial meltdown. He introduced sweeping changes to ensure countries swamped by the crisis had access to emergency loans.

He has overseen changes that have given emerging market countries, such as China, India and Brazil, greater voting power in the IMF, and waded into a thorny dispute between Washington and Beijing over the value of the Chinese currency.

(Additional reporting by Lesley Wroughton, Noeleen Walder, Catherine Bremer and John Irish; Writing by Mark Trevelyan and Tim Ahmann; Editing by Peter Millership and Anthony Boadle)