A “one-night stand” and an angry husband have endangered the career of the French head of the International Monetary Fund and dismayed President Sarkozy as he seeks to put a French stamp on a new world financial order.

The news that Dominique Strauss-Kahn, 59, is being investigated in Washington over an alleged fling with a former subordinate has unsettled Mr Sarkozy, who has been working with him to form a new Bretton Woods pact on financial regulation.

When he visited President Bush at Camp David on Saturday, Mr Sarkozy presented a vision for this on behalf of the European Union that conflicts with US wishes. Although the romantic troubles of Mr Strauss-Kahn were known in Paris, some politicians suggested that the case had been leaked to the US media to undermine the French effort.

Mr Sarkozy and Paris insiders knew that the IMF was looking into allegations against Mr Strauss-Kahn, a senior Socialist Party figure. The President was furious that Mr Strauss-Kahn, who is married to Anne Sinclair, a television news presenter, had risked a chance to restart his career and to help France internationally by living up to his old name as un grand séducteur — the term used by Le Journal du Dimanche yesterday. Ms Sinclair said that the couple had put the affair behind them.

The case began in January when Mario Blejer, a senior Argentine economist, alleged that Piroska Nagy, his wife, had been seduced by her boss at the Davos international forum. His complaints led to an investigation by a law firm in Washington in August. Ms Nagy, who worked in the Africa department of the IMF, took redundancy and now works in London at the European Bank for Reconstruction and Development (EBRD).

Mr Strauss-Kahn denied that he had abused his position as managing director, either by giving Ms Nagy preferential conditions for leaving the IMF or helping her to get the job in London. The EBRD said that there was nothing irregular about the recruitment of Ms Nagy.

Paris had been hoping that no news would break until Mr Strauss-Kahn had been cleared later this month.

Allies of Mr Strauss-Kahn and some commentators dismissed the affair as another episode of hysteria by puritanical US institutions.

Luc Chatel, the government spokesman, said: “Dominique Strauss-Kahn has shown throughout this crisis that he was up to the task.”

The consensus among the Government and media, however, was that Mr Strauss-Kahn was foolish to risk breaching the strict rules of conduct in international organisations.

“The affair may well be ridiculous compared with the destiny of the world, but it touches the heart of the culture of the American Government and the IMF,” said Claude Askolo-vitch, the editor of Le Journal du Dimanche. “It is less about sexual puritanism . . . than a deep horror of lies and conflict of interest.”

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