November 12 - Issue 38 - IMF Publishes Terms of Appointment for Strauss-Kahn
New York, November 12, 2007 - On November 2 the International Monetary Fund released the Terms of Appointment for new Managing Director Dominique Strauss-Kahn, who began his five-year, renewable term on November 1.
This is the first time that the IMF has released the Terms of Appointment for a Managing Director. In the past, the salaries and benefit packages of MDs were summarized in the Fund's annual reports.
The Terms lay out the expectations, salary and benefits for Strauss-Kahn. The Terms state that Strauss-Kahn will avoid any conflict of interest - or "the appearance of such a conflict." It is expected further that:
- He has resigned from any other office he holds, public or private;
- He will not accept any "gift, fee or favor" from any government or authority outside of the Fund;
- He will refrain from engaging in partisan political activity, though he may be a member of a political party and contribute to the party or individual candidates; and
- He will provide annual financial certification and disclosure.
The Terms also delineate Strauss-Kahn's compensation, set at $420,930 per year, which will be adjusted each year for inflation. In addition, he will receive $75,350 each year for cost-of-living expenses. This amount is given "to enable you to maintain, in the interests of the fund, a scale of living appropriate to your position as managing director and to the fund's need for representation." Both sums are net of any income taxes.
He also will be reimbursed for "reasonable expenses actually incurred for entertainment directly related to the business of the fund," including travel in first-class.
The document details the Managing Director's retirement benefits, including a life-long pension, a supplemental retirement allowance based on years of completed service, and a separation allowance based on total salary in the last year of service.
Strauss-Kahn may manage his own private investments and those of his immediate family, conditional on avoidance of conflict-of-interest issues.
The appointment of Strauss-Kahn took place amid increasing calls from civil society groups and IMF member states to reform the procedures for selection of the heads of the IMF and World Bank. Traditionally European governments have selected the MD of the IMF and the United States government has selected the President of the World Bank.
In response, Strauss-Kahn, who is from France, has said that he expects to be the last MD appointed through the traditional process.
The release of the Terms of Appointment may be seen as representing a slight improvement in transparency in IMF governance. Other aspects of the reform calls include: increased transparency of the selection process for MD, a competitive process, and an emphasis on qualifications over nationality.