France Telecom Board to Meet After CEO Charged in Probe
France Telecom SA (FTE)’s board will meet next week to discuss the consequences of Chief Executive Officer Stephane Richard’s fraud charge in a probe linked to when he was chief of staff for then-Finance Minister Christine Lagarde.
The board will gather early next week to discuss whether Richard should remain CEO, Technology Minister Fleur Pellerin said today on RTL radio. Finance Minister Pierre Moscovici said yesterday the board should meet “as soon as possible.”
The charge, related to a dispute that began in 1993 between a state-owned bank and a French businessman, is a distraction for the Paris-based phone carrier seeking to reverse falling sales. The government push for a board meeting calls Richard’s future into question as France Telecom, owner of the Orange brand, navigates price wars in France and declining phone bills.
“It’s too early to say what the consequences, if any, will be for France Telecom,” Frederic Boulan, a London-based telecommunications analyst for Nomura International Plc, said yesterday. “For now, all that’s clear is the legal process is under way and tomorrow morning will be back to business for Stephane Richard.”
France Telecom’s employee shareholders, who control nearly 5 percent of its capital, said in a today statement they want Richard to continue to lead the company. The employee shareholders have one representative on the 15-person board of directors, according to France Telecom’s website.
The French state holds a stake of about 27 percent in the former phone monopoly and has three board representatives.
Several other French CEOs have kept their jobs after criminal cases. The Paris prosecutor recommended Total SA’s Christophe de Margerie stand trial on charges of bribing Iranian officials for oil contracts last month, the same day the company settled a U.S. probe into the bribes. He’s already been tried in the Oil-for-Food case involving Iraq, and a verdict is expected next month. De Margerie has denied the allegations in both cases. Bouygues SA (EN) CEO Martin Bouygues was cleared in 2003 of charges of misusing corporate funds.
The case doesn’t affect Richard’s responsibilities at France Telecom, said Jean-Bernard Orsoni, a company spokesman. He declined to comment on the board meeting. “Richard will be back at his desk tomorrow morning,” Orsoni said yesterday.
Bernard Tapie, a businessman who endorsed Nicolas Sarkozy’s successful presidential effort in 2007 and his failed re-election bid in 2012, won a 385 million-euro ($509 million) arbitration award in 2008, ending a dispute with the government over his company’s sale of German sportswear brand Adidas AG (ADS) in 1992. Tapie accused then-state-owned bank Credit Lyonnais of cheating him while handling the sale.
Richard will appeal the judges’ decision to charge him and “views their accusation as insulting and grotesque,” his lawyer, Jean-Etienne Giamarchi, said by telephone.
The 51-year-old Frenchman, who served as Lagarde’s chief of staff between 2007 and 2009, became CEO in 2010. His mandate runs through May. The company’s shares fell as much as 1.7 percent in Paris and were down 0.6 percent to 7.43 euros at 1:44 p.m. France Telecom, the worst performer on France’s leading Cac 40 index in 2012, has dropped 11 percent this year.
Jean-Francois Rocchi, formerly responsible for liquidating Credit Lyonnais debt for the government, was also charged yesterday in the affair.
Lagarde, now managing director at the International Monetary Fund, refused to appeal the arbitration decision, saying “a very large majority” of the money would return to the state through the creditors’ claims. She has denied any wrongdoing and was heard last month in a separate investigation led by the Cour de Justice de la Republique, which focuses on ministers’ actions in office. She was named a key witness after two days of questioning.
Lagarde’s lawyer, Yves Repiquet, didn’t return a call for comment on how this might affect the CJR’s investigation.
French Industry Minister Arnaud Montebourg on June 6 was cited by Le Monde as saying Richard should quit his job as chief of France Telecom if charged in the Tapie case. Montebourg later denied making any statement to the newspaper.