Choosing a Successor to IMF s Strauss-Kahn Financial and Sexual Propriety the Key, Not Nationality No Long-term Effect of Scandal on IMF Reputation COMPAS Inc. Public Opinion and Customer Research June 6, 2011
1.0 Overview In the wake of the scandal involving the IMF s Dominique Strauss-Kahn, the CEOs and business leaders on the COMPAS business panel take a tough line about financial, sexual, and political propriety as requirements for holding high office in international agencies. Almost all believe that a candidate should be disqualified if he or she has a history of financial impropriety. A clear majority believes that a candidate should be disqualified if the candidate is too close to unsavory regimes like China or Iran or has a history of accosting women but no history of being charged and convicted. A candidate does not have to be convicted of an offence to be disqualified, say panelists. The IMF s managing director s post should not be reserved for a European but should be open to any individual strictly on the basis of merit. The Strauss-Kahn scandal is unlikely to have long-term effects on the IMF s reputation, say panelists. These are the key findings from this past week s Internet survey of CEOs and business leaders on the COMPAS panel. The weekly business survey is undertaken for Canadian Business magazine. 2.0 Details Attitudes about the criteria for selecting the next IMF Managing Director are reported in tables 2.1 and 2.2 while table 2.3 reports panelists views about the short- and long-term effects of the Strauss-Kahn scandal. 2
Table 2.1: How to Choose the Next IMF Managing Director 1 Be based on merit irrespective of origin. Come from an emerging economy that follows the democratic model. Be European because Europe is the centre of many of the problems of near bankrupt national governments. Come from one of the major emerging economies like China, India, or Brazil. Be European to follow the tradition of choosing Europeans. 6.4 65 24 4 6 0 0 1 0 3.6 11 9 7 20 16 20 15 3 2.8 1 9 9 13 15 20 33 1 2.8 0 4 12 22 12 22 26 1 2.2 0 3 3 14 14 30 38 0 Table 2.2: What Should Prevent Choice of a Senior Executive 2 Conviction of financial impropriety. 6.6 87 6 1 0 0 1 5 0 1 (Q1) The purpose of the International Monetary Fund is to maintain an orderly and stable international monetary system. French economist and politician Dominique Strauss-Kahn resigned as IMF managing director after being arrested by New York police and charged with sexual assault and unlawful imprisonment. With respect to choosing his successor, on a 7 point agreement scale where 1 means disagree strongly and 7, agree strongly, how much do you agree each of the following opinions? The next managing director should RANDOMIZE. 2 (Q2) It turns out that Dominique Strauss-Kahn has a history of accosting women. On a 7 point scale where 1 means it should not be a barrier to appointment and 7, an absolute barrier, how much of a barrier should each of the following be to the appointment of a senior official of an international agency? RANDOMIZE. 3
A history of financial impropriety. Conviction of sexual impropriety. A history of being too close to dangerous regimes like Iran. A history of being too close to dictatorial regimes like China. A history of accosting women but no history of being charged and convicted. 6.3 72 17 2 1 0 1 6 0 6.1 61 20 6 4 1 5 4 0 5.8 54 16 13 4 2 5 5 1 5.3 34 17 21 15 2 5 5 1 5.0 33 12 15 18 6 9 6 1 Table 2.3: (Q3) On a 7 point scale where 1 means not at all and 7, a great deal, how much does Strauss-Kahn s conduct reduce your confidence in Western countries for acquiescing in or supporting his original selection. France as an open democracy. The IMF as a responsible manager of the international monetary system. 3.9 15 11 18 11 9 17 18 1 3.3 11 13 9 10 7 22 28 0 3.3 10 10 16 6 11 18 29 0 Table 2.4: (Q4) Do you foresee the impact of Strauss-Kahn s conduct on the reputation of the IMF as being % Essentially negligible 32 Short-term 48 4
% Medium-term 16 Long-term 5 Don t know 0 The following verbatim comments provide a nuanced sense of respondent opinion: We spend an inordinate amount of time trying to put our values on other countries as a response to internal political pressure instead of excluding our values, which in some cases are out of touch with the majority of the world. We should cease and desist and concentrate ONLY on merit. Like most bureaucracy it has invented a need for itself and refuses to die. It has no credibility so why should the conduct of the leader be important. Let the criminal system look after him. Canada should be front and centre in the selection of the next Chairman of the IMF. We are the globally recognized leaders of fiscal responsibility. All other choices are strictly political in nature, which is ridiculous when what is needed is competent guidance. To have someone from an emerging economy as head is just plain silly. We have emerged from the global crisis better than virtually any other country. On that basis we can offer competent leadership. The IMF needs to get their heads out of their butts. There should have been a question on the CBC's media coverage on this issue - they tried to turn it into a debate on corporate ethics and governance. The mental gymnastics of portraying an international political government appointment as 'corporate' was amazing, twisting reality as only the CBC is able to do. They tried it again this morning, none of the interviewees bit. How can the CBC maintain that the IMF is a business? 5
All parties should be of good moral behavior. It is unfortunate that the inappropriate actions of certain people in high office are condoned regardless of the effort and quality of the work they do. Their actions offset all the good that they may be doing. We have seen the effect that scandals have had on very senior political people. The IMF is a body that does good but it relies on the obligations that governments have made to provide assistance where needed. That money comes from the taxpayers of those countries making funds available. Regardless of the nationality of the head of the IMF there is an obligation to act at the same level of proprietary as we all are. We have a rash of leaders caught with sexual impropriety, leaders who think business/political rank places them above the law need swift replacement. The conduct of our leaders must be impeccable as trust seems to be a lost value and nations everywhere are revolting against this. It appears the IMF [has] two standards; one hard and fast for employees, and the second screw off it's none of your business. Real third world. Each director is appointed by their respective countries, so there are no rules per se. It will be interesting to see if they have enough evidence to convict him. 3.0 Methodology The COMPAS web-survey of CEOs and leaders of small, medium, and large corporations was conducted May 27-31, 2011. Respondents constitute an essentially hand-picked panel with a higher numerical representation of small and medium-sized firms. Because of the small population of CEOs and business leaders from which the sample was drawn, the study can be considered more accurate than comparably sized general public studies. In studies of the general public, 6
surveys of n= 82 are deemed accurate to within approximately 10.9 percentage points 19 times out of 20. The principal investigator on this study is Conrad Winn, Ph.D. 7