Dominique Strauss-Kahn's lavish life: How does a socialist public servant pay for $3,000-a-night hotel suites and first-class flights?

Commentary about business and finance.
May 16 2011 3:42 PM

Dominique Strauss-Kahn's Lavish Life

How does a socialist public servant pay for $3,000-a-night hotel suites and first-class flights?

Dominique Strauss-Kahn. Click image to expand.
Dominique Strauss-Kahn

Dominique Strauss-Kahn, the managing director of the International Monetary Fund, allegedly sexually assaulted a maid in a $3,000-a-night Midtown Manhattan hotel suite this weekend. Then, police arrested him in the first-class cabin of a Paris-bound flight. How can a socialist public servant afford such a luxurious life?

DSK, as he is widely known, earned a modest salary by international banker standards, but his job came with an ample expense account. He earns about $420,000 a year in salary, plus pension contributions and generous benefits. On top of that, he receives about $75,000 "to enable [him] to maintain, in the interests of the Fund, a scale of living appropriate to [his] position"—essentially, money for a Washington, D.C., home fancy enough to entertain foreign dignitaries and the world's economic leaders.

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But that's not all. Strauss-Kahn also had carte blanche to charge the fund for all "reasonable expenses" incurred entertaining and meeting with politicians and policymakers. And he received generous travel funds, including a per diem and a dispensation for "all hotel expenses." As per his contract, he always flies first class: "Your travel on official Fund business…shall be in first class." (Notably, the IMF says he was not on official business during his trip to New York, therefore he had to foot the bill for the hotel and flight himself.)

According to the New York Post, Strauss-Kahn had a special arrangement where he could fly first-class on any Air France flight, at any time. It is not clear who would have paid for those flights or whether the details of the arrangement are even true. It seems unlikely that Air France would have gifted the flights to DSK, as he is contractually barred from accepting most presents worth more than $100. (A first-class ticket from New York to Paris runs about $10,000.)

DSK's compensation and expenses are in line with his peers, the small handful of central bankers and finance ministers at the helm of the global economy. The president of the World Bank, for instance, makes almost exactly the same amount. As per the bank's most recent annual report, Director Robert Zoellick earns $441,980 in salary, plus $79,120 for living expenses.

Nevertheless, DSK's finances became a major issue in his home country of France even before his arrest. This spring, he faced accusations of being a "champagne socialist" after a photograph of him climbing into a $100,000 Porsche * got play in the papers. (The car was not his.) And France Soir published a viral hit-job-slash-investigation, reporting he wears suits made by Barack Obama's tailor that cost up to $35,000. (DSK denies the allegation.)

The press also revealed that Strauss-Kahn and his wife, Anne Sinclair, a prominent television personality, wealthy in her own right, travel between a $4 million home in Georgetown, two multimillion-dollar apartments in Paris, and a holiday riad in Marrakech. "It tends to prove that the IMF's managing director…has, to some extent, lost contact with 'real life,' " France Soir wrote, "By blindness, by remoteness, by intoxication?"

The broader charge that IMF and World Bank executives live too well on generous expense accounts while aiding—and sometimes imposing austerity on—some of the world's poorest and most distressed economies is not new. Last year, for instance, the two institutions came under fire for giving employees generous pay raises. "We greatly value the hard work and expertise of bank staff," a spokesman  for Britain's Department for International Development told the Washington Post. But "when governments worldwide are cutting public spending, increasing taxes, and reducing or freezing public-sector pay, to award an above-inflation pay rise risks making the bank appear out of touch."

Correction, May 16, 2011: The article originally misspelled Porsche. (Return to the corrected sentence.)

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