Stephane Richard has resigned as chairman and chief executive of telecoms giant Orange after being convicted in a fraud trial that strikes at the heart of the French establishment.
Orange said on Wednesday night that it would find a replacement no later than Jan 31. It was not clear whether the company plans to separate the roles of chairman and chief executive.
Mr Richard was fined €50,000 and handed a one-year suspended sentence after being found guilty of complicity in the misuse of public funds over a French state payout of €400m (£336m) to the late businessman Bernard Tapie.
Judge Sophie Clément said Mr Richard had “committed grave acts by favouring the interests of Mr Tapie at the expense of those of the state”.
Mr Tapie was handed compensation and damages after accusing the state of defrauding him when he sold a stake in Adidas, the sportswear group, to a bank backed by the French government in 2008.
Christine Lagarde, the French finance minister at the time who is now president of the European Central Bank, had pushed through the settlement.
It was later overturned after prosecutors said the process was tipped in Mr Tapie’s favour as a reward for backing Nicola Sarkozy in the 2007 presidential election.
Mr Richard’s case relates to his time as Ms Lagarde’s chief of staff when she was finance minister. She was convicted of negligence in 2016 in relation to the scandal, but faced no fine or sentence due to her “international reputation”.
Mr Richard, who was cleared of one count of fraud, denied any wrongdoing and branded his sentence from the Paris appeals court “profoundly unjust”. He planned to appeal against the verdict.
He said the verdict was “impossible to understand. I only executed the ministerial decision to go before arbitration, which has been totally assumed by Christine Lagarde.”
Christine Lagarde is a former French finance minister
The 60-year-old, who was acquitted in the first trial, has been chief executive of Orange for the past decade.
Bruno Le Maire, the French finance minister, stepped into the debate about Mr Richard’s role in the company. He has previously said that the government’s position was that chief executives in charge of state-backed firms must step down if convicted of a crime.
Orange, which is 27pc owned by the French state, held a board meeting on Wednesday where Mr Richard announced the decision to hand over his mandate.
He has previously said he would not seek to stay on when his third four-year term runs out in May 2022. However, he wanted to remain chairman.
The company’s directors said yesterday: “The Board thanks him for his commitment at the helm of Orange for the past 11 years, from restoring an appeased working environment after the social crisis to the transformation of Orange into a leading multi-service operator in Europe and Africa.”
“Stephane will have contributed significantly to the history of the group in sometimes tumultuous times and always working in the best interests of the company.”
The board added that it will continue the recruitment process started a few months ago to implement the new governance.
The case has no direct bearing on Orange’s business, which has expanded into the African market and diversified into online banking under Mr Richard.
Orange merged with rival operator T-Mobile in the UK 11 years ago to create the mobile network, EE, which BT bought for £12.5bn in 2015.
Orange has been struggling for growth as it grapples with the conflicting forces of needing to upgrade the network while facing fierce competition from rivals in France and Spain.
Profits slipped by 0.7pc to €3.6bn when it gave a third quarter update last month, despite French mobile and broadband customers rising by 121,000 and 80,000 respectively in the three months to September.
The company stood by its full-year targets, which included a slip in operating profit and underlying cash flow from €2.5bn last year to €2.2bn.
The Vodafone chief executive, Nick Read, has been pressuring European authorities to allow telecoms operators to consolidate as it battles anaemic growth in Italy, Spain and Portugal.