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Orange CEO’s job in question as Lagarde’s image takes hit

Text by FRANCE 24

Latest update : 2013-06-13

A French government official has raised doubts over whether Orange chief executive Stéphane Richard will keep his job after being investigated for fraud, in a case that has brought IMF head Christine Lagarde more unwanted attention.

A member of French President François Hollande’s administration raised doubts on Thursday over whether Orange chief executive Stéphane Richard could remain in his post after he was placed under investigation for fraud.

French authorities are looking into Richard’s role as chief-of-staff to IMF chief Christine Lagarde, then former President Nicolas Sarkozy’s finance minister, in a 2007 settlement case that saw business tycoon Bernard Tapie awarded 400 million euros (515 million dollars) in cash.

“It’s an open question,” Digital Economy Minister Fleur Pellerin told RTL radio, when asked if the corruption probe could compromise Richard’s job at the head of one of Europe’s biggest telecom groups, 27% of which is owned by the French government. “That is the question that the executive board will have to answer when it holds a special meeting in the next few days.”

Orange (formerly France Telecom) has downplayed the possibility that Richard would have to step down, stating that he would be back at work Thursday morning.

The scandal in which Richard is entangled reached its climax in 2007, when Sarkozy’s government ended a face-off against the partially state-owned Crédit Lyonnais by paying extensive damages to Tapie. A high-profile Sarkozy supporter, Tapie had contested the bank’s role in the 1993 sale of his stake in sports attire company Adidas.

Before the affair, Tapie served a 6-month prison sentence in 1997 for match-fixing during his tenure as president of French football club Olympique Marseille.

Richard, who was placed under formal investigation on Wednesday following three days of intensive questioning, has denied any wrongdoing. His lawyer, Jean-Etienne Giamarchi, has said that Richard plans to appeal the decision.

In France, a formal investigation often precedes a trial, but such inquiries are sometimes dropped without further action.

Lagarde damaged?

The investigation of Richard is seen as a blow to the reputation and credibility of his former boss, Lagarde, in her functions at the helm of global lender IMF.

Lagarde oversaw the payout to Tapie, and was questioned last May over suspicions that she rigged the process so that the businessman would get the cash if he pledged his support for Sarkozy in his 2007 presidential campaign.

Though Lagarde was not charged in the affair, she currently holds the status of “assisted witness”, which, according to the French legal system, means that she can be summoned for further questioning at any time.

The 57-year-old Lagarde was responsible for referring Tapie’s demand for compensation to a three-person arbitration committee, which ruled in his favour.

One of the three members of the committee is currently being investigated on suspicions of being biased in favour of Tapie.

The International Monetary Fund’s executive board has reiterated its confidence in Lagarde, stating that she may remain in her position for the duration of the corruption probe.

Lagarde’s detractors say that she should not have opted for an arbitration process and therefore run the risk of the state having to pay a steep compensation sum to a convicted criminal.

But the IMF head has said she acted with the public interest in mind, and those who have defended her say that the arbitration procedure she launched had also been used by her predecessor at the finance ministry, Jean-Louis Borloo.

(FRANCE 24 with wires)
 

Date created : 2013-06-13

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