The Executive Board of the International Monetary Fund (IMF) said yesterday there had been no harassment, favoritism or any other abuse of authority by Managing Director Dominique Strauss-Kahn.

The announcement came after an inquiry was launched into Strauss-Kahn's alleged improper conduct in his affair with his woman subordinate Piroska Nagy while both worked at the IMF.

Strauss-Kahn has admitted that he had an affair with Nagy, but he denied he had harassed her or abused power.

Despite clearing him of abuse of power, the IMF statement also noted that the incident "was regrettable and reflected a serious error of judgment on the part of the managing director."

"The executive board stressed that the personal conduct of the managing director sets an important tone for the institution and, as such, must be beyond reproach at all times," it noted.

Strauss-Kahn welcomed the report.

"I am grateful that the board has confirmed that there was no abuse of authority on my part, but I accept that this incident represents a serious error of judgment," he said in a statement.

"I very much regret the incident and I accept responsibility for it. I have apologized for it to the board, to the staff of the IMF and to my family. I would also like to reiterate my apology to the staff member concerned for the distress this process has caused," said the IMF chief.

"I agree with the board that the personal behavior of the managing director sets an important tone for the institution and I am committed, going forward, to uphold the high standards that are expected of this position," he noted.