Washington - The International Monetary Fund (IMF) is investigating possible abuse of power by its head, Dominique Strauss- Kahn, in connection with a sex liaison with an underling of Hungarian origins, the Wall Street Journal reported Saturday.

The 59-year-old French economist and socialist, married to French television journalist Anne Sinclair, was named last year as IMF director.

The IMF investigation concerns his alleged relationship with Hungarian-raised Piroska Nagy, who was a senior official in the IMF's Africa department and is married to Mario Blejer, a prominent Argentine-born economist who has worked at the IMF, the Central Bank of Argentina and the Bank of England, the Journal reported.

Nagy now works for the European Bank for Reconstruction and Development in London.

An IMF spokesman told the Wall Street Journal that the Washington- based organization had retained the international law firm, Morgan, Lewis & Bockius LLP, to conduct the investigation.

The controversy comes on the heels of last year's resignation by Bush confidante Paul Wolfowitz as head of the IMF's sister organization, the World Bank, midway through his four-year term. That conflict involved an outsize pay raise for his girlfriend and fellow World Bank employee.

The IMF probe was apparently sought by the long-serving board member A Shakour Shaalan, who represents Egypt and other Arab countries on the board. Representatives of Russia and the US also sought the probe, the Journal reported.

"There was an allegation concerning improper behavior of a personal nature on the part of the managing director," Masood Ahmed, the IMF's chief spokesman, was quoted as saying.

Strauss-Kahn, whose main advocate for the post last year was French President Nicolas Sarkozy, said in a statement that he had not abused his position. He said it involved an "incident which occurred in my private life" in January 2008. (dpa)