Stéphane Richard, CEO and Chairman of Orange Group (pictured) has announced he will step down from the twin roles he has held since March 2011. The decision to leave follows a conviction for misusing public funds in a case that dates back to 2008. The company’s Board of Directors issued a short press release thanking Richard for his service and stating he will continue until 31 January at latest whilst they implement a new governance structure and identify his replacement. It is likely that the roles of CEO and Chairman will be split between two separate individuals. The French government, which continues to own 23 percent of Orange, is known to want the business to follow best practice in corporate governance by ending the concentration of power that comes when both positions are held by the same person.
The Paris Court of Appeal found Richard guilty on Tuesday, giving him a one-year suspended sentence and a fine of EUR50,000 (USD56,000). The trial was yet another instalment of the long-running fraud and corruption saga centered on businessman Bernard Tapie, who died in October. In 2008 the French government agreed to pay Tapie EUR404mn (USD453mn) in compensation following claims and counter-claims about the state-owned Crédit Lyonnais bank defrauding Tapie whilst the bank was managing the sale of sports goods manufacturer Adidas on Tapie’s behalf. There was widespread suspicion that the arbitration panel which decided the compensation payment had been biased towards Tapie. Christine Lagarde, the Finance Minister who appointed the arbitration panel, was subsequently convicted of negligence in December 2016. This week’s court decision was that Richard, who was Lagarde’s chief of staff, was complicit in the misuse of public funds by recommending that Tapie be granted a settlement. Richard said he intended to appeal the ruling.
Richard’s contract with Orange was due to expire in May 2022 but he wanted to remain as Chairman afterwards, even if that meant relinquishing his role as CEO. His conviction made his position untenable, not least because current Finance Minister Bruno Le Maire has repeatedly said executives at state-owned companies should quit if found guilty of a crime. Richard turned to Twitter to tell his colleagues in Orange about his gratitude for 11 years as their ‘captain’.
À toutes mes chères équipes d’Orange, qui m’ont témoigné aujourd’hui leur soutien et leur affection, je veux dire ma profonde gratitude, et la fierté que j’ai éprouvée tout au long de ces onze années à être leur capitaine, dans les bons et les mauvais jours.
— Stéphane Richard (@srichard) November 24, 2021
Like many other French business leaders, Richard was a product of the elitist ‘grandes écoles’ system where top schools select students who inevitably gain a wealth of contacts that benefit them later in life. He graduated from both École des Hautes Etude Commerciales (HEC) and École Nationale d’Administration (ENA). Current French President Emmanuel Macron is also a graduate of ENA but earlier this year he promised to shut down the institution as part of reforms designed to enhance social mobility. ENA admits fewer than 100 students each year, all of whom are fast-tracked into prestigious government jobs. Richard made the most of the French approach, and since 2019 he has also served as the Chair of the Board of the GSMA. No announcement has been made about Richard’s position at the GSMA.
Richard served a long time as the boss of a major international telco but his departure serves as a timely reminder of how close the relationship between governments and telcos can be, and how quickly those relationships can change when the political winds start blowing in a different direction. However successful Richard was, it is right to question the wisdom of combining the role of Chairman and CEO at any major corporation. The appointment of telecoms leaders is often influenced by political connections, but the advantages that come from personal allegiances do not last forever.