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France Telecom’s board is standing by chief executive Stéphane Richard despite the fraud investigation into his time as a top government aide.

The directors said in a canned statement that they still had “full confidence” in Richard and his ability to lead the company.

“The board considers that the legal measures affecting Stéphane Richard do not impede his ability to fully and effectively lead Orange as its chairman and chief executive officer,” it said.

Richard has been caught up in a fraud scandal linked to his time as France's then-finance minister Christine Lagarde's chief of staff in the government of former president Nicholas Sarkozy. Last week, he was placed under formal investigation in a judicial probe into a €400m settlement made to a Sarkozy supporter from a state-owned bank.

Businessman Bernard Tapie, who had backed the pint-sized presidential wannabe in 2007, claimed he had been defrauded by failed bank Credit Lyonnais during the sale of his firm Adidas in the 1990s. The dispute was settled in arbitration undertaken by Sarkozy’s government in 2008, when Tapie was awarded €285m plus interest. But the government's opposition has alleged the arbitration was rigged to reward Tapie for supporting Sarkozy.

Lagarde, now head of the International Monetary Fund, was also questioned in the probe, but was made an “assisted witness” and has not been put under formal investigation. She denied any wrongdoing.

Richard was questioned by police for 48 hours last week before being placed under formal investigation - a decision acknowledged by French finance minister Pierre Moscovici [PDF].

In French law, formal investigation means that the court believes there is serious evidence for a crime and it usually, although not always, indicates that prosecution will follow. The France Telecom chief also denies any wrongdoing, and has instructed his lawyers to fight the claims against him. ®

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