Orange CEO Convicted in $453 Million Arbitration Fraud Case
Orange CEO Convicted in $453 Million Arbitration Payout Case
(Bloomberg) --
Orange SA Chief Executive Officer Stephane Richard was convicted by Paris appeal judges over his handling of a multi-million euro dispute when he worked for the then-French finance minister more than a decade ago.
Richard was found guilty of aiding and abetting the misuse of public funds and helping the late Bernard Tapie cheat the government out of about 403 million euros ($453 million) in 2008. Judge Sophie Clement handed Richard a one year suspended sentence and a 50,000-euro fine on Wednesday, overturning a lower court acquittal.
“He carried out serious wrongdoing by favoring the interests of Bernard Tapie to the detriment of those of the state,” Clement said in court.
The criminal conviction is a stain on the career of Richard, 60, who has often worked between politics and business. His mandate as CEO of Orange is due to end in May after over a decade at the helm navigating through a competitive assault by a low-cost challenger and a bruising price war. Richard has said he’s in favor of staying on as chairman while splitting the top roles at the French telecom company.
Orange declined to comment on the ruling. A top finance ministry official previously said that Richard must step down if he is convicted. Shares were little changed in Paris trading at 10:20 a.m.
A board meeting is planned this afternoon to take decisions over the governance of the company, according to people familiar with the matter.
Richard said in a statement he will lodge an appeal at France’s top court to overturn his “profoundly unjust” conviction. He added that it will be up to the Orange board to decide whether he can stay on as CEO.
“The accusations of aiding and abetting misuse of public funds are baseless,” Richard said.
The fraud case date back to the sale of Tapie’s stake in Adidas AG in 1993. Tapie claimed a state-owned bank involved in the deal cheated him, sparking a slow-burning dispute. Then French Finance Minister Christine Lagarde agreed in 2007 to put the matter into arbitration, which led to the multimillion-euro award for Tapie the following year.
Lagarde was tried in separate proceedings by judges specialized in ministerial misconduct who found her guilty in 2016 of negligence for failing to appeal the award to Tapie, yet didn’t sentence her.
Clement said Richard acted as a “true defender” of the interests of Tapie, who was meant to be his opponent in the Adidas case.
“His actions can’t be seen as negligence given their deliberate and repeated nature,” she said. While there’s no evidence Richard was aware that the arbitration was a fraud, he acted against the interests of the French state in proposing not to appeal the payout, she said.
The entire payment was eventually cut to zero by a civil court after doubts were cast on the impartiality of one of the three arbitrators.
In parallel, criminal accusations emerged against Tapie, with Richard suspected of aiding and abetting the alleged scam. When the case went to trial, Paris judges ruled in 2019 that there was no proof that Richard or Tapie took part in any fraud.
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