Orange CEO Richard Cleared Over Decade-Old Payout Scandal

(Bloomberg) -- Orange SA Chief Executive Officer Stephane Richard was cleared by Paris judges in a scandal related to his role at the Finance Ministry in a 403 million euros ($451 million) arbitration payout a decade ago, cementing his position at the head of France’s largest telecommunications firm.

There was no proof that Richard took part in any fraud, Presiding Judge Christine Mee said Tuesday as she read the verdict. The panel of three judges also cleared businessman Bernard Tapie, who prosecutors said benefited from the alleged fraud.

“I’m obviously very happy that my innocence has finally been recognized by the Justice system,” Richard, 57, said in a statement after the verdict. Tapie’s lawyer, Herve Temime, said the allegations “didn’t hold up.”

The verdict could have triggered a top management shakeup at Orange after Finance Minister Bruno Le Maire said last year that Richard would have to resign if convicted. Richard has led Orange for about a decade, during which he calmed labor unrest following a wave of employee suicides and saw the company through a sustained competitive assault by low-cost telecom challenger Iliad SA.

The trial related to Credit Lyonnais’ sale of Tapie’s stake in Adidas AG more than two decades ago. Tapie accused the then-state-owned bank of cheating him, sparking a slow-burning dispute that would eventually affect some of France’s most prominent politicians and corporate officials.

Lagarde Ruling

In 2016, Christine Lagarde, then the head of the International Monetary Fund, was found guilty of negligence for failing, as French Finance Minister, to appeal an arbitration panel’s multi-million-euro award to Tapie. Although she was convicted, she avoided a jail term or any fine, allowing her to continue in her role at the IMF.

Judge Mee backed the conduct of the former finance ministry officials, saying that Tapie’s claims weren’t “non-existent.” Choosing to resolve the dispute via arbitration “wasn’t, in principle, contrary to the state’s interests,” she said.

Still, the Tapie arbitration payout was annulled in a separate civil lawsuit by a court in 2015 and the French government has sought to recover the money.

Tuesday, the four other men who were on trial alongside Tapie and Richard were also cleared.

Orange shares in Paris were little changed at 13.89 euros after the ruling.

“I’m more motivated than ever and proud to lead the group towards a responsible and human development, respectful of our values,” Richard said in the statement.

Employees ‘Relieved’

Orange employees are “relieved” that Richard will stay on as CEO, the CFE-CGC union said in a statement. Richard will be able to continue his mandate in a “more serene way,” and dedicate himself fully to challenges including fiber deployment and 5G, it said.

Stephane Beyazian, an analyst at MainFirst Group, said the verdict was “great news” for Orange internally, “because he was appreciated by staff.”

“For the markets, it means the continuation of the group’s strategy and guidance but there’s no specific upside to the shares following this decision,” Beyazian said in a phone interview.

--With assistance from Phil Serafino.

To contact the reporters on this story: Gaspard Sebag in Paris at gsebag@bloomberg.net;Angelina Rascouet in Paris at arascouet1@bloomberg.net

To contact the editor responsible for this story: Anthony Aarons at aaarons@bloomberg.net

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