NEW YORK, July 1, (Agencies): Former IMF chief Dominique Strauss-Kahn was released without bail on Friday after a dramatic court hearing where the sexual assault case against him appeared to shift in his favor.
Strauss-Kahn, who smiled as he walked out of court, still faces felony charges of attempted rape and sexual assault over the alleged attack on a hotel maid in New York. His lawyers said they will seek to have the charges dismissed but the judge said prosecutors were continuing to investigate.
The turnabout could upend French politics. Strauss-Kahn, 62, was a strong candidate for the 2012 French presidential election until his May 14 arrest.
At a hearing to seek changes to his bail conditions, prosecutors said the credibility of the woman at the center of the case had been thrown into question.
As a result, the court agreed to let Strauss-Kahn be freed and his bail and bond returned. He agreed to return to court as needed, including for a July 18 hearing.
“I understand that the circumstances of this case have changed substantially and I agree the risk that he would not be here has receded quite a bit. I release Mr. Strauss-Kahn at his own recognizance,” Justice Michael Obus told the court.

Strauss-Kahn’s arrest forced his resignation from the International Monetary Fund and appeared to end his presidential hopes, weeks before he had planned to declare his candidacy.
His supporters in the French Socialist party voiced delight at the apparent reversal and some said they hoped he might re-enter the 2012 presidential race.
The case has hinged on the accuser, a 32-year-old Guinean immigrant who cleaned the $3,000-a-night suite at the Sofitel hotel in Manhattan where Strauss-Kahn was staying.
Prosecutors said at the hearing their change of view on the maid’s credibility followed “an extensive investigation” but they gave no details.
The New York Times quoted two well-placed law enforcement officials as saying prosecutors found issues with the accuser’s asylum application and possible links to criminal activities, including drug dealing and money laundering.
They also discovered the woman made a phone call to an incarcerated man within a day of her encounter with Strauss-Kahn in which she discussed the possible benefits of pursuing the charges against him, the paper said.
The conversation was recorded. The man was among a number of people who had made multiple cash deposits, totaling around $100,000, into the woman’s bank account over the last two years, The New York Times said.
The woman’s brother told Reuters in Guinea that she was the victim of a smear campaign.
Her lawyer said after the hearing that his client’s story had never wavered and Strauss-Kahn’s assertion that she had consensual sex with him was a lie.
The maid told police that Strauss-Kahn tried to pull down her pantyhose and forced her to perform oral sex before she broke free.

The New York Times first reported on its website that investigators uncovered major inconsistencies in the woman’s account of her background, citing two law enforcement officials. The Times also reported that senior prosecutors and Strauss-Kahn’s lawyers are discussing whether to dismiss the felony charges against him, including attempted rape.
Prosecutors also believe some of her account of her activities in the hours surrounding the alleged attack wasn’t true, though they haven’t necessarily reached a new conclusion about the incident itself, the official said. They have not decided whether to downgrade the charges, the official said.
In early hearings, prosecutors underscored that they thought the evidence against Strauss-Kahn was formidable. And it appeared so at first, the official said.
“In the beginning, it was a strong case. There was a victim and several witnesses and forensic evidence that supported the victim’s claim,” the official said.
The woman was in Strauss-Kahn’s room only briefly before the alleged attack, his semen was found on her uniform, and she quickly reported the alleged assault and told a consistent story about it to investigators and prosecutors, the official said. Prosecutors have also said in court that Strauss-Kahn seemed on surveillance tapes to be in a hurry as he left the hotel, though his lawyers have said he was merely rushing to lunch.

Socialist Party spokesman Benoit Hamon said the New York court’s decision to ease bail conditions for the ex-IMF head, formerly their best hope for next year’s presidential vote, “is a moment of intense relief for us.”
“It’s a thunderbolt — but in the opposite direction this time,” said Socialist former prime minister Lionel Jospin, referring to the shock when the news of Strauss-Kahn’s arrest broke on May 14.
His allies were too cautious to suggest Strauss-Kahn would try to run for president after the scandal, but agreed he could have a huge impact on his party’s morale if he were cleared of the accusations and returned to politics.
“His presence alongside us would be decisive for our success in the presidential election,” said Jack Lang, a leading Socialist former minister, on BFMTV.
Strauss-Kahn will be “an indispensable player in political life in the coming months”, Jean-Marie Le Guen, a Socialist member of parliament close to the former IMF head, said on France Inter radio.
Hamon told reporters: “The most important development today is that the (New York) prosecutor now recognises that there is a strong doubt over the accuser’s claims.”

“Still, the accusation has not dropped its case, so we will wait for July 18... to see the new developments in this affair,” Hamon added.
Strauss-Kahn’s departure from the presidential race prompted the Socialist Party’s leader Martine Aubry to step up and declare her candidacy this week, running for the nomination against former party leader Francois Hollande.
The deadline for applying for the party nomination is July 13. A close party ally of Strauss-Kahn, Michele Sabban, called for the primary process to be suspended so he has time to run.
Hamon said ahead of the New York court hearing Friday that such a suspension was not currently under discussion.
The third Socialist candidate in the race, former presidential contender Segolene Royal played down the prospect of a return by Strauss-Kahn.
“In human terms, that’s not likely to be one of his priorities,” she said.
“The trauma suffered by him and those close to him is after all quite dreadful.”
Aubry said she hoped the New York Times report would allow Strauss-Kahn to “end his nightmare”, but did not comment on how it would affect the party’s primary to choose a presidential candidate in October.