France Telecom – otherwise known as Orange – saw its shares jump three percent on Monday after President Francois Hollande backed its boss to keep his job even though he is under investigation for fraud during his time as a top government aide.
Hollande’s backing is crucial for chief executive Stephane Richard as the company is 27 percent owned by the state.
The company’s board of directors expressed “full confidence” in Richard at a meeting on Monday.
“The board considers that the legal measures affecting Stephane Richard do not impede his ability to fully and effectively lead Orange as its Chairman and Chief Executive Officer,” the board said in a statement.
An independent board member has been appointed to follow the situation.
The fraud charge dates from the time when Richard worked at the finance ministry at a time when a large compensation payment was made to a close friend of former president Nicolas Sarkozy.
Investors were relieved that Europe’s fourth-biggest telecom group by sales would not face a leadership vacuum.
Richard’s future at France Telecom has been in doubt since magistrates last week opened a formal investigation into his role in the award. Richard denied wrongdoing and is appealing against the decision to put him under investigation.
In French law a formal investigation means there is “serious or consistent evidence” pointing to likely implication of a suspect in a crime. It is one step closer to a trial, but some such investigations have been dropped without going to court.