Orange CEO Stéphane Richard retains his position at the helm of the company despite currently being under formal investigation for fraud involvement, having received full backing from the board of directors.
France's largest mobile operator confirmed on Monday that it would stand by its embattled CEO, stating that "the board has decided to reassert its full confidence in Stéphane Richard and his ability to effectively meet the numerous challenges facing Orange with the same energy as ever in the best interests of the company, its employees, its customers and its shareholders".
French investigating magistrates claim to have evidence of a conspiracy relating to an arbitration process started in October 2007, to settle the so-called Bernard Tapie-Crédit Lyonnais case.
The case involved business tycoon Tapie who took over failing German sportswear company Adidas and quickly turned the company’s fortunes around. Tapie had asked his bank, Credit Lyonnais, to then sell Adidas, which the bank said it did for his minimum asking price of €470m. The bank however kept secret the fact that it had actually sold Adidas to itself, through off-shore companies. Credit Lyonnais ended up selling on Adidas for a €400m profit.
After a 15-year legal dispute with the state relating to the actions of the bank, a subsequent arbitration tribunal awarded Tapie €403m in 2008.
The magistrates claim ex-President Nicholas Sarkozy conspired to enrich his friend Tapie at the expense of the state. Investigators say the decision to award €403m to Tapie was cooked up by Sarkozy’s Elysée Palace, and that Tapie was given favourable treatment for having been a high profile supporter of Sarkozy. Investigators claim the plot was initiated in 2007 after Sarkozy was elected president, and then carried out by, amongst others, Stéphane Richard and Pierre Estoup.
Three people have been placed under formal investigation, including Orange chief Richard and Pierre Estoup, a retired judge who led the supposedly independent three-man panel which arbitrated in Tapie’s case.
Current IMF chief Christine Lagarde was initially questioned for 24 hours over two days last month about her alleged role in the Tapie affair. Christina Lagarde was France's finance minister back in 2007, and the Orange CEO was Lagarde's chief of staff.
Lagarde is reportedly considered more of a witness than a suspect, and claims to have witnessed Estoup having friendly relations with Tapie and his lawyer for many years. Lagarde maintains that Richard was aware of this but did not inform her. She claims the Elysée Palace also knew this and was manoeuvring to get the good result for Tapie with Richard’s assistance.
The investigation will specifically have to determine the exact role played by Richard in the case, as both he and Lagarde disagree on who pushed for arbitration. Richard maintains it was Lagarde who agreed to the arbitration process, while Lagarde was reported as saying that Richard "appeared to firmly favour arbitration".
The investigators have unearthed records of 22 visits by Tapie to the Elysée Palace in 2007 and 2008.
Board member Bernard Dufau is responsible for ensuring that the ongoing legal investigation doesn't prevent Richard from effectively running the company.
Orange is the fourth-largest operator in Europe and is 27 per cent owned by the French state.